Meeting of the Parliament 28 May 2024
I, too, thank the Local Government, Housing and Planning Committee and its clerks for their work through stages 1 and 2. I also highlight the way in which the minister has approached the bill. Tom Arthur has done an excellent job, and I have very much appreciated our numerous conversations. It is very pleasing to see the subject of those conversations reflected in what we have in the bill, and I thank him for that.
That is important, because getting this right is important. Tourism is hugely important to the Scottish economy, and it is not hard to see why. Scotland is an amazing country to visit—it has a huge amount to offer and we have a huge global reputation. If tourism is important, the experience that people have in our accommodation is absolutely critical to that. It is the touch point—the human element—of that visitor experience.
However, we must also acknowledge that with that come costs to local authorities. A well-designed tax, if done properly, has the potential to align the interests of authorities with those of the bodies that are being levied—in this case, accommodation businesses. That is important, because although local authorities are critical to their local economies, they are not always connected to the upside of economic growth. The way that non-domestic rates are levied and redistributed means that there is not a direct connection, particularly where tourism is concerned. A number of local authorities that host visitors do not necessarily receive the economic benefits of tourism but face costs, which is why I think that the levy is an important measure.
I acknowledge that there is an inherent tension in the implementation of the bill in relation to providing clarity and consistency while providing a direct economic link to local authorities. That link requires local authorities to have the ability to adjust and amend the detail in order to get it right for their local context.
That is why I am pleased by the safeguards that have been introduced, particularly around small business providers and the VAT threshold. I think that it is right that the number of days for long-term visits is in place, but I have some concerns about how straightforward that will be for people to understand and for local authorities to implement. That is why we need to pay close attention to how the statutory guidance is adopted as the levy is implemented.
The VAT point is worth noting not just because of the threshold, but because we need to acknowledge that the tax will levy on top of VAT. A number of contributors in previous debates have said that lots of other places around Europe have a visitor levy, but it is important to put on the record that those places often have a lower rate of VAT or no VAT at all for visitors. We are going to be placing a higher tax burden on visitors than many other parts of Europe, and people have options on where they go.
Although it is right that the level of detail will be set at a local level, I ask local authorities to bear in mind that, if they are going to make such a comparison with other cities, they need to understand that they are often operating in a different VAT context. They also need to bear in mind the fact that this is very much a recovering sector. Domestic tourism in the UK has not returned to its pre-Covid levels, even though tourism involving tourists from overseas might have done. That is another reason why I think that the lead-in time is important.
Ultimately, although introducing the levy and getting the detail right are important, it is also important that local authorities continue to monitor and reflect as circumstances change, which is why I made the point about doing that on an on-going basis at national and local level. At the end of the day, the proposed reforms could act like the tourist board that we refer to in that standing dialogue with the sector, local authorities and Government. Let us get the detail right, let us make sure that the communication is right and let us make sure that this is a levy that works for local government and the industry. I believe that it can do that if it is implemented correctly.
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