As members will be aware, at this point in the proceedings the Presiding Officer is required under standing orders to decide whether, in her view, any provision of the bill relates to a protected subject matter—that is, whether it modifies the electoral system and franchise for Scottish parliamentary elections. In the Presiding Officer’s view, no provision of the Visitor Levy (Scotland) Bill relates to a protected subject matter. Therefore, the bill does not require a supermajority to be passed at stage 3.
Before we move to the debate, I call Shona Robison, the Cabinet Secretary for Finance and Local Government, to signify Crown consent.
For the purposes of rule 9.11 of standing orders, I advise Parliament that His Majesty, having been informed of the purport of the Visitor Levy (Scotland) Bill, has consented to place his prerogative and interests, in so far as they are affected by the bill, at the disposal of Parliament for the purposes of the bill.
The next item of business is a debate on motion S6M-13349, in the name of Tom Arthur, on the Visitor Levy (Scotland) Bill at stage 3. Members who wish to speak in the debate should press their request-to-speak button.
17:33
Before I turn to the content of the bill, I thank members for the thoughtful and constructive way in which many of them have engaged with it as it has progressed through Parliament. Members have put forward their views and arguments in a measured way in committee meetings, in the chamber and in my own individual meetings with them. I believe that that scrutiny process has improved the bill and has shown Parliament in a good light.
I strongly believe that a visitor levy can be a force for good and that it is a measure that can bring benefits to visitors, residents and businesses. It has the potential to be an important tool in enabling investment in local economies and supporting an important industry in Scotland.
Visitor levies are common in many parts of the world, but I am proud that, if passed, the bill will create the opportunity for the first true visitor levy in the United Kingdom. Twenty-one European countries already have visitor levies and I believe that it is right for Scotland to have the ability to add to that number.
The measures in the bill reflect good practice from around the world and our particular context in Scotland. I will turn to each of the features of international good practice as highlighted by the European Tourism Association and discuss them in relation to the bill. The first important factor is that genuine, effective, local consultation is carried out before any visitor levy is introduced. The bill will require local consultation before a visitor levy scheme is introduced or modified, and that consultation must involve communities, businesses that are engaged in tourism and local tourist organisations. Furthermore, we have today agreed to amendments that will strengthen that on-going consultation and engagement with the creation of a visitor levy forum.
Another element that is highlighted as good practice internationally is for it to be clear and transparent where funding that is raised by a visitor levy is being used. We know from our consultation and engagement that that is also important to the tourism industry here in Scotland. The bill therefore puts in place clear parameters on how the funding that is raised by a levy may be used. As members know, the funding may be used only to develop, support or sustain
“facilities or services which are substantially for or used by persons visiting the scheme area for leisure or business purposes”.
The definition was adjusted as the bill moved through Parliament in recognition of the views of the Local Government, Housing and Planning Committee at stage 1. That is another example of where the scrutiny process has improved the bill.
That position will give local authorities the flexibility to use the funding that is raised by a levy in the best way that supports the visitor economy in their area. That could include, for example, street dressing or promotion of a particular destination. It could support housing that is necessary to address recruitment and retention issues in the tourism sector. The funding could be used to invest in regeneration work that is required to facilitate investment by the private sector in a new hotel or tourist attraction. The Government has purposely not specified exactly how the funding should be used. What we have sought to do in the bill is to put in place a structure and process that means that, within broad parameters, decisions may be made locally that support the local economy.
A suitable notice period for the introduction of, or changes to, a visitor levy is another feature of international good practice. That also reflects the strongly held position of business in Scotland. That is why the Government has consistently said that a suitable implementation period is necessary to give businesses and local authorities time to prepare their systems, train staff and carry out other necessary preparations.
Under international good practice, a visitor levy should be easy to pay, collect and remit. The bill therefore puts in place a robust process with a suitable level of local discretion for collecting and remitting a visitor levy. The calculation of the visitor levy is straightforward and, importantly, it reflects the cost of the accommodation that the visitor has decided to book.
The bill also puts in place a clear process for any compliance and enforcement action. We do not expect such tools to be used often, but it is important that they are there to provide local authorities with what they need to address actions by those who, for example, deliberately seek to avoid a visitor levy.
The bill will not stand alone. Last year, I asked VisitScotland to convene an expert group and I invited local government and business organisations to sit on it. That group’s purpose is to develop guidance for local authorities that are seeking to introduce a visitor levy in their area.
As per our interactions on the amendments, I think that the group is a good way of striking the balance. However, I wonder what will happen to the group once the guidance has been drawn up. Does the Government have a view on whether the group should continue on a standing basis or be incorporated in other industry engagement that the Government will seek to do on an on-going basis?
I think that there is a need for on-going engagement. The point that Mr Johnson raises speaks to the importance of not only the review period in individual local authorities but, as agreed by Parliament in amendments to the bill, the review period for the legislation as a whole. We will have clear milestones for review both locally and nationally to consider how visitor levy schemes are operating individually and cumulatively, which will provide opportunities to consider any refreshing of the guidance and updates that are required. I agree that continued dialogue between local government and the tourism sector, which is provided for in the bill, is important, but dialogue with Government is important as well. Given the existing structures that we have, such as industry leadership groups and so on, there are suitable forums that will allow industry to feed back, as well as allowing local government to feed back to Government through the regular dialogue that takes place.
I am curious as to whether the funds that are raised through the levy will have to be spent in the given financial year or whether there could be scope for a sinking fund to enable larger capital investments to be made in a multiyear programme. Has that been given consideration?
The scheme sets out very clear requirements about objectives and very clear reporting requirements, including separate accounting for the levy that is raised. One thing that is important for the success of the scheme is a recognition that a range of projects could benefit. Some could require relatively low levels of investment, but others—as Paul Sweeney alludes to—could require significantly more. We are keen to ensure that local authorities have the flexibility to apply the revenue that is generated from the levy as they see fit, but also in a way that is consistent with their past and on-going engagement and consultation with business, tourism organisations and communities in their area.
Over the past few months, the expert group has worked to bring together guidance that draws on the knowledge and experience of the tourism sector and local government. As I said, as a result of the scrutiny of the bill at stage 2, that guidance will have a statutory footing. That is a key element in getting a visitor levy that is right for Scotland, and I put on record my thanks to those who sit on the expert group or who otherwise support its work.
As I said at the start of my remarks, the bill is an important measure. If passed, it will give local authorities a significant new tax power. However, it is not something that the Government has proposed lightly, and it has followed considerable engagement and discussion over many years.
In the bill, the Government has sought to strike the right balance between national consistency and local flexibility. I believe that we have done that. I welcome the improvements to the bill that have come about from engagement and amendment, and I ask that the Parliament supports it.
I move,
That the Parliament agrees that the Visitor Levy (Scotland) Bill be passed.
17:41
I thank the Parliament’s clerks for the support that they provided me with during the passage of the bill—albeit that my amendments have perhaps not met with as much success as I had hoped for, today—and the many organisations, businesses and councils that engaged with the Parliament and the committee as the bill made its way to stage 3.
On a positive note, I welcome the fact that the minister has accepted the arguments that I put forward at the Local Government, Housing and Planning Committee on excluding children and young people from the levy, and I welcome the amendments that the Government lodged following my amendments at stage 2 on business involvement, the creation of the visitor levy forum and the future review of the impacts of the bill.
I also very much welcome the acceptance today of the amendments in the names of my colleagues Jeremy Balfour and Pam Gosal. I hope that the estimated 2,000 to 3,000 small businesses that have an annual turnover that is below the VAT threshold that the bill will have will be exempt. The issue has been of significant concern for small businesses, and I pay tribute to the work of the Federation of Small Businesses in Scotland, the Association of Scotland’s Self-Caterers, the Scottish Tourism Alliance and the Scottish B&B Association, as well as Scottish Land & Estates, for their constructive work towards the delivery of those amendments, which, I hope, will help to protect small businesses from the impacts of the bill.
Once again, though, legislation has been taken forward by ministers as a framework bill. As has been raised in respect of other bills, that presents a number of concerns, challenges and issues that relate to the variation that the implementation of the bill could ultimately produce across Scotland. I fear that ministers have not taken on board the warnings and lessons from the disastrous implementation of the short-term lets licensing legislation and the negative impact that that continues to have on small businesses—the fragmentation, inconsistency and, often, disproportionate costs.
Many accommodation businesses across Scotland feel that they have been under consistent bombardment from Scottish National Party and Green ministers, which has negatively impacted on their businesses and has involved the loss of many businesses in Scotland. Evidence from the Scottish B&B Association suggests that 67 per cent of its members say that the cost of the STL licensing has impacted on their business revenue and affected their viability as businesses.
I am concerned that ministers have failed to develop a robust exemption scheme in the bill. My amendments today would have helped to deliver that, and I think that we will look back and not be happy that those were not taken forward. I do not believe that the Parliament should have to hope that the Government will make statutory guidance and that all 32 councils—if they all decide to implement a visitor levy—will then implement a set of exemptions that will deliver.
For argument’s sake, if it is left to each council to decide on local exemptions, we could see a situation in which the parents of children who are receiving treatment at the sick kids hospital in Edinburgh would be forced to pay a visitor levy if they stay in a hotel, while families in Glasgow whose children are receiving treatment at the Queen Elizabeth hospital would not. That is not acceptable, and I do not think that anyone in the Parliament would tell their constituents that it is. However, we have failed to act by putting that exemption in the bill. I am disappointed by that. Members representing islands will know that the family and friends of patients from the islands often accompany them to hospital for treatment, and, under the bill, people who come from Orkney to support someone who is going into Aberdeen royal infirmary will pay a tourist tax to stay in accommodation in the city, which is wrong. I hope that the minister will pay attention to that and to what exemptions could still be created in the statutory guidance.
We should be proud of and celebrate our outstanding tourism sector in Scotland. The visitor offering that tourism businesses across Scotland provide is world class, and the importance to our local and national economy is significant and must never be underestimated or undervalued. Tourism is estimated to be worth £4.5 billion to the Scottish economy. It is critically important, and it directly supports more than 250,000 jobs across our country. Importantly, some of those jobs are in some of the most economically vulnerable rural and island communities.
We have heard that many businesses, in different parts of the country, still do not feel that they have recovered from the pandemic and that the levy will have another impact on them. The Scottish Conservatives have said that there needs to be more at the heart of the visitor levy to develop funds for the investment in and improvement of our tourism sector, rather than councils simply looking at it as a revenue stream. When the legislation comes into force, we will have to see whether councils are forced to look to it to fill voids in their funding. It is important that councils do not see the new power simply as a golden goose to make up for funding cuts that have come from the Scottish Government.
I also want to ensure that money is not raised and then taken away under funding formulas or cuts to culture budgets.
Will the member take an intervention?
I do not know whether I have time.
Briefly, Mr Carson.
Does Mr Briggs agree that, by offering cheap camping holidays, businesses such as Loch Ken holiday park, Auchenlarie holiday park and Brighouse Bay holiday park, which are in my constituency, all have a very low impact on the environment and on local communities? Caravan and camping clubs also offer low-impact holidays. Given that they have not recovered from Covid, the levy could have a big impact on them.
That is why I lodged a set of amendments, working with the caravan and camping sector, which were intended to ensure that the sector would not be impacted by the levy. I hope that the minister can include some of that in the statutory guidance that he will create, especially for businesses where accommodation is not the main source of income, and for the council areas that may exempt camping and camping sites, as Edinburgh has suggested that it will.
I do not believe that the Scottish public has been informed properly about the impact that the legislation will have on them. Perhaps that is why ministers were so keen that it should come into force before the 2026 Holyrood elections. For most Scots, the issue is not about visitors; it is about them. It is about the fact that they will be paying a 10 per cent additional cost to stay in a hotel when their house is flooded and that, potentially, when they go to hospital with their children they will have to pay the tax because we have no exemptions. When many people see that, they will question why Parliament has not created exemptions.
As things stand, there remains a significant vacuum in many aspects of the bill, with ministers insisting that statutory guidance will provide the clarification to help the accommodation sector to limit the costs and negative impacts that the bill will have on their businesses. We have not seen that guidance, but we are desperate to see what it will look like, and I hope that the sector will help to work to define it.
Our Scottish tourism sector already faces tax burdens that are among the highest anywhere in the world. Scottish Conservatives will not, therefore, support the bill at decision time. Throughout the bill process, we have worked constructively and tried hard to improve the legislation. We have worked with the minister to try to see where limits can be set—
Mr Briggs, I have to ask you to conclude.
—to address the negative impacts on businesses and on the most vulnerable.
I call Mark Griffin to open on behalf of Scottish Labour.
17:50
I thank the Local Government, Housing and Planning Committee; the minister and his bill team; the Parliament’s legislation team; and all the organisations that have given evidence to shape the bill that we have before us.
For the best part of a decade, we in Scottish Labour have called for a visitor levy. We are pleased to see that the Scottish Government has listened, and we are happy to support the passage of the bill at stage 3. We believe that local authorities should have as much control as possible over the implementation of the levy, simply because that reflects our commitment to push power out to local communities.
The visitor levy is a particularly good example of where that approach works, given the diversity of Scotland’s tourism sector. Some local authority areas are much more frequently visited than others, which are likely to see potentially negligible returns from any levy. We welcome the flexibilities in the bill that allow councils to implement a levy if they so choose and to design it in a way that suits their local circumstances, in consultation with relevant stakeholders.
Throughout the passage of the bill, the committee and other interested parties have attempted to balance support for local government with maintaining economic growth and supporting sustainable tourism. It is clear that the tourism and hospitality sector has faced significant difficulties over recent years, with the Covid-19 pandemic and the associated lockdowns and the subsequent cost of living crisis. The committee came to the view that the levy “would be unlikely to” deter visitors. We agreed that a small additional fee on top of accommodation costs is seen as part of the normal tourist experience in many other countries and could help to ameliorate the potential negative consequences for communities when tourism becomes unsustainable.
While we support the levy, however, we have said that implementation must not place too great a burden on businesses or local authorities. In particular, we are keen to ensure that smaller businesses are not disproportionately affected by the application of any future levies that are decided locally. The levy will be a shot in the arm to hard-pressed local authorities that are currently struggling with the pressure on local services that is brought about by large numbers of visitors. Crucially, however, revenue must not be used to replace funding for core local services. For more than a decade, Scottish local authorities have seen their budgets stripped to the bone, which has left libraries closed, rubbish uncollected and services for some of our most vulnerable people shut down and never reopened. The levy cannot be a substitute for money lost due to a reduction in the general revenue grant to local authorities, and it cannot be about plugging a gap.
Accounts Commission figures show that between 2010-11 and 2021-22, revenue expenditure on culture and leisure fell by 23.6 per cent; spending on roads dropped by 16.1 per cent; and spending on environmental services dropped by 12.8 per cent. In the face of those swingeing cuts over which this Government has presided, any revenue that is raised must be used to improve the tourism offer, and the services that tourists appreciate and for which they visit Scotland.
The levy, while it is welcome, will not touch the sides of the £6 billion black hole that the Government has created in local budgets, and the Government cannot pretend that it will act as a replacement for the fair core funding settlement that communities need. Scottish Labour has a different vision for local government that will guarantee a fair funding settlement and protect vital local decision making so that local people have a say over the services that affect their day-to-day lives most.
We also see tourism as a key part of our wider business case for Scotland, where it encourages economic growth through the promotion of brand Scotland and by ensuring that our country becomes a vital destination for business and leisure travellers. The visitor levy forms a key part of our commitment to implementing a new tourism strategy that builds cultural links with key markets and develops brand Scotland’s reputation on a global stage. We have proposed similar levies in previous manifestos. We have identified that such a levy could be a key part of the fiscal framework and the democratic accountability of local authorities. For those reasons, we will support the bill at decision time.
I call on Ariane Burgess to open on behalf of the Scottish Greens.
17:55
I start by thanking the Parliament clerks, the clerks of the Local Government, Housing and Planning Committee, the bill team and all the stakeholders who joined us to help shape the bill. The debate has brought back memories of our visits to Orkney Islands Council and to Aviemore, where we spoke with representatives of Highland Council and other stakeholders.
The Scottish Greens are pleased to see the Visitor Levy (Scotland) Bill come to its final stage today, having secured its introduction during budget negotiations back in 2019. The approach—capturing for communities the benefits of Scotland’s global appeal—has been the norm in many of the world’s top tourist destinations for a long time.
It has been the long-standing position of the Scottish Greens that councils should have greater financial powers to raise their own revenues, as opposed to the current position, in which around two thirds of their budget comes from Scottish Government grant. We have some of the most centralised and least empowered local government on our continent, but that is gradually changing.
The visitor levy power is an important part of a much wider set of empowerment measures and must be joined, as soon as possible, by a cruise ship levy—a move that will be of particular benefit to the island councils in my region, and which was announced by the Greens last year. Greens’ proposals for a cruise ship levy are linked to emissions, so that the biggest and most-polluting boats would pay more. Our island constituents deserve our full consideration of all such issues, and that can be done only through stand-alone legislation.
We are incredibly fortunate that Scotland is such an attractive destination for visitors, whether they come from abroad or from the rest of the UK, or it is our residents choosing to explore and enjoy their own country for their holidays. Nowhere is that more true than in my region. From Shetland to Speyside and from Skye to the small isles, that is great for our economy, especially in fragile rural communities, although it also puts huge pressure on rural communities, the natural environment and public services. Rarely does a summer season go by without local—and often national—headlines about inconsiderate or even dangerous parking, antisocial behaviour and litter on the north coast 500. Clearly, that is from a small minority of visitors, not all of whom will be staying overnight. However, such things put pressure on council services, so it is only fair that local residents do not pick up the bill.
Tax is one way in which we all contribute to building a better world for our communities. I am proud that the Scottish Greens are honest about the need for a fairer tax system if we want better public services. We have already secured big changes, including raising income tax on the highest earners, raising tax on the purchase of second and holiday homes, doubling council tax on holiday homes and the increasing range of new local powers such as the visitor levy, the cruise ship levy to come and the infrastructure levy on big developers. By diversifying our tax base, we can empower communities to deliver on their local priorities and have real control.
There are a few themes from the evidence that I have heard during the progress of the bill that I would like to highlight. The first concerns the 18-month gap before a scheme can be introduced. The Convention of Scottish Local Authorities made it clear that that length of time is clearly disproportionate and excessive, so we need to reflect on that.
The second theme is the scope for spending the funds that will be raised. Many hospitality businesses in rural communities are struggling to fill vacancies, which are caused in large part by local housing shortages. During the committee’s debate on the matter at stage 2, the minister was clear that the funds that will be raised through the levy could be spent on housing and regeneration, both of which support the wider economy on which the tourism industry relies. It is vital that councils retain the flexibility to do that, so I remind the minister of his words to the effect that local authorities will want to use the funding in a way that best supports their local visitor economy. Such support could include relevant regeneration and, potentially, support for affordable housing projects.
The bill is just one of many measures that are required to empower local councils, but it is one that the Scottish Greens are proud to support.
I call Liam McArthur to open on behalf of the Scottish Liberal Democrats.
17:59
I join others in thanking the Local Government, Housing and Planning Committee and all those who gave evidence to it, including people in Orkney. I pay tribute to the committee for taking the time to visit the islands.
We broadly support the principle underlying the bill, which is that of empowering local authorities to take steps to meet the challenges that they face. Earlier, in considering the amendments, we heard that certain local authorities are champing at the bit, although it would be a mischaracterisation to assume that all local authorities find themselves in that position.
At the same time, we need to acknowledge that, far from champing at the bit, many businesses in the tourism sector have approached the debate with apprehension. We heard from Miles Briggs about the views that have been expressed by the Federation of Small Businesses and the Association of Scotland’s Self-Caterers. Those organisations have rightly highlighted concerns that I am picking up locally and which are being felt nationally. Part of that is about uncertainty, and part of it is a reflection of cumulative effect, whether that is to do with the short-term lets legislation, the broader cost of living crisis or the aftermath of Covid.
It is absolutely right that the bill has taken an approach that seeks flexibility and local determination wherever possible, in recognition that the tourism sector looks different in different parts of the country and, as I said earlier, at different times in the year.
Nevertheless, to command the confidence of the sector and the wider public, fairness and equity need to be at the heart of the bill, and it absolutely needs to ensure that it can wash its own face. There is no point in setting up a system of attracting, from a levy, revenue that barely covers the cost of administration.
I return to my amendments on cruise traffic and motorhomes, which we discussed earlier in proceedings. I happen to believe that the development that we have seen in both those aspects of the tourism sector is a good and healthy sign, but both require to be managed. Unfortunately, in the bill as it stands, the fact that bed and breakfasts, self-catering businesses and hotels are captured by the levy but cruise traffic and motorhomes remain outwith its ambit—for reasons that I understand—means that it is difficult for many local authorities to see a way of proceeding with it.
On the exemptions that would be delivered, which go back to the principle of local flexibility, I disagree with Miles Briggs—I think that those are better determined locally. He is, however, absolutely right to point to the example of patients in Orkney and Shetland. They will often access services within Orkney and Shetland, and one would assume that any local scheme would exempt them. However, very often they seek specialist treatment in Aberdeen, Inverness or even further south, and it is difficult to see how they, their patient escorts and so on would be exempt under schemes that are operated by other local authorities.
I pay tribute to the minister for the characteristically constructive way in which he has sought to engage on the issues that I raised around cruise liner traffic and motorhomes and, as has been clearly evidenced through the votes on stage 3 amendments, the way in which he has engaged across the parties during stages 2 and 3. That is entirely characteristic.
I recognise that the bill will be passed this evening, and maybe the concerns that I have raised will come to be seen to be misplaced but, at this stage, given the gaps, the uncertainty around key issues and the way in which the bill would apply in practice in the islands that I represent and others, it is not a piece of legislation that I or other Scottish Liberal Democrats can support.
We move to the open debate.
18:04
I thank my fellow Local Government, Housing and Planning Committee members and colleagues for their detailed consideration of the Visitor Levy (Scotland) Bill. The bill delivers on a commitment that was made to our local councils to provide them with the power, as requested, to apply a local visitor levy to help to improve their local tourism economies. That is what it says on the tin, and that is what it does. All the revenue that is raised must be reinvested locally in facilities and services to enhance the visitor experience, while benefiting the local community and the economy.
The Scottish Government has engaged with many stakeholders for a number of years. I hope that, tonight, Parliament will support the bill. It will, ultimately, help to improve local tourism offers and benefit local economies, too.
This type of tax is commonplace around Europe now. As of the publication date of the bill, 21 out of 27 European Union member states charge an occupancy rate of one description or another.
Will the member take an intervention?
I am sorry—I have four minutes. We have probably heard enough debate for the day and I can see that members are desperate to get home.
Although I do not expect East Ayrshire Council to use the power, I know that many councils are eagerly looking forward to introducing the measure, so that they can improve the offer for the experience of their visitors.
It would be fair to say that there was a range of opinions on many of the proposals, including on whether to apply a flat rate, a percentage rate or a tiered rate; whether it should be with a cap or without a cap; what exemptions should apply; how soon it can be introduced and so on. We have heard some of that debate being replayed today and tonight. There was plenty of debate about whether a percentage rate was better than a flat rate. As I recall, the argument that a visitor to a five-star luxury hotel should probably pay a little bit more than a visitor to a small B and B slightly won the day.
Some councils wanted a shorter lead-in time, as we heard during the debate on the amendments, given the time that the bill has already been under consideration. However, as I recall, there seemed to be a preference for an 18-month to 24-month lead-in time to give everybody enough time to prepare and get ready for the levy’s being introduced. That period seems to be in line with advice from the European Tourism Association.
If the bill is passed, our councils will, of course, be obliged to consult their stakeholders further in order to help them to shape the levy to fit local needs and circumstances as far as possible. That, too, is a flexibility that the councils appreciate, as was stressed by a number of members around the chamber. The councils can set the levy as a percentage of the accommodation cost and they can apply it to all or parts of their local area.
COSLA’s resources spokesperson, Councillor Katie Hagmann, welcomed the progress of the bill as providing
“a small but significant step towards maximising the revenue raising powers available to local government”,
and the councils, as we might expect, will have a crucial next step to take in taking the bill forward. As we know, the Government is committed to considering further how to bring cruise ships into the sphere of a local visitor levy, which possibly requires separate primary legislation to achieve it.
Our local government committee members gave the bill a thorough examination. Although we could not get unanimous agreement on the principles of the bill at the committee stages, at least we all agreed that the introduction of a levy at a modest rate would be unlikely to have a significant deterrent effect on visitor numbers. That is worth stating.
With that, I am happy to conclude my remarks and to listen to the contributions of members who remain to speak in the debate.
18:08
I am grateful to be contributing to today’s stage 3 debate on the Visitor Levy (Scotland) Bill from the Scottish Conservative benches. I echo what was said earlier and thank the clerks of the Local Government, Housing and Planning Committee for all their hard work, and all the external organisations that provided briefings for members.
The Scottish Conservatives back Scotland’s world-leading tourism sector, which is why I have always been open to hearing about how we can best support it. I thank the minister and the majority of members across the chamber for supporting my amendment 46, which will require a visitor levy scheme to specify whether the levy is not payable in relation to accommodation that has an annual turnover below the VAT threshold. I hope that that will make some difference in protecting small and micro businesses.
I fully understand the need to empower local authorities, but that should not come at the expense of businesses. I am of the firm belief that tourists and accommodation providers should not be penalised through the proposed tax. Instead, local councils should be provided with a fair funding settlement that fully supports our tourism sector. When I spoke to 31 out of 32 councils in Scotland about the issue, many of them were, frankly, desperate to generate additional cash. However, other councils will not make a penny from the levy, so we need to find a sustainable long-term solution.
In fact, the levy will negatively impact businesses to the extent that it will undermine long-term revenues and financial sustainability—it will reduce profits and sector growth and will, therefore, reduce tax revenues.
The cost of doing business in Scotland is already high, and many businesses are still reeling from the impact of repeated lockdowns. That is further compounded by business rates, VAT, stringent regulations on short-term lets and so on. As has previously been mentioned, around 2,000 to 3,000 smaller accommodation providers are not VAT registered. Despite my amendment, being pushed over the VAT threshold by the levy will remain a major concern for many people, because the committee heard anecdotal evidence that it can take a 50 per cent increase in turnover just to cover the cost of going over the threshold.
In essence, small businesses, instead of paying VAT because of increased turnover, will be paying VAT for acting as unpaid tax collectors for local councils. That will be a costly and complicated endeavour, particularly for small accommodation providers. Many of those businesses rely on traditional bookkeeping methods that involve the use of ledgers and diaries, rather than sophisticated accounting systems. Implementing and managing the visitor levy will impose a significant administrative burden on those businesses and will divert time and resources away from their core operations. The small accommodation sector runs on tight margins and already faces an endless barrage of regulations. Should the bill be passed, the Parliament runs a real risk of sinking small businesses to fill the gaping black hole in public finances.
I thank members for backing my stage 3 amendment, but I cannot support a bill that will penalise the tourism sector and hurt businesses. I urge members to protect Scotland’s small and micro businesses, which are the backbone of our local economies and communities, by voting against the bill at stage 3.
I will vote against the Visitor Levy (Scotland) Bill at decision time. I have persistently attempted to make the bill as cost neutral to businesses as possible, but I cannot ignore the additional financial and administrative burden that the bill will cause. It remains unclear how it will even be administered. The Scottish Government should not penalise tourists and accommodation businesses through the use of the tax but should instead provide a fair funding settlement to local authorities that fully supports our tourism sector.
18:12
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.
18:17
It has been about five years since the Scottish Greens first secured a commitment to the bill’s being introduced. That happened as part of annual budget negotiations the last time we were in Opposition with a minority SNP Government. Since then, we have had a pandemic that delayed its introduction. It should have been introduced at the end of the previous parliamentary session, but, for understandable reasons, it was one of the bills that could not be introduced. That put us in the privileged position of being in government with SNP colleagues while the bill was being developed. I am glad of the work that we were able to undertake together, particularly with the minister, Tom Arthur.
I put on the record our thanks to Mr Arthur for the excellent engagement, not just while our party was in government with SNP colleagues, which we would expect, but since the end of the Bute house agreement and our move into Opposition. That model of engagement is absolutely a model for working in what we now have—a Parliament of minorities, where that outreach and approach to Opposition parties will be essential. It is an example of the fact that the next two years can still be very productive for this Parliament if we have such cross-party collaboration.
Visitors contribute so much to our communities and our local economies, but they do not contribute very much to local authorities, which have to bear the cost of them. At the core of the bill is the principle that local communities and taxpayers should not have to contribute all the costs. Some years ago, I was struck when Parliament took evidence from Adam McVey, the then leader of the City of Edinburgh Council, on the huge additional sums that were required simply to empty the bins in Edinburgh city centre during the festival. There is a massive increase in costs for the local authority, which does not get much in the way of direct financial benefit from the festival, despite all the other immense benefits that it brings.
The bill begins to address that. It will be of huge value in areas in my region such as Arran and Loch Lomond. One area of the bill that is particularly well designed is the flexible approach that would allow West Dunbartonshire Council—although I would prefer it to work with Loch Lomond and the Trossachs National Park Authority on this—to introduce a visitor levy up the west shore of Loch Lomond, where it would be very lucrative, and to do so in a way that would not necessarily compel the local authority to introduce it in other areas, such as Clydebank, where it might not be so helpful. That money could be reinvested in communities such as Balloch, which benefit from the visitor economy but are also seeing significant negative impacts at the moment. That money could be used to mitigate those impacts and improve the local visitor experience.
I thank my colleague Ariane Burgess and Living Rent, which is Scotland’s tenants union, for their campaigning for confirmation that the scope of the bill would allow the proceeds to be spent on affordable housing. That is absolutely essential for not just local communities but local businesses, particularly hospitality businesses in rural communities, which are experiencing acute labour shortages due to housing shortages. I am very glad that the minister confirmed at stage 2 that that would be the case, and I hope that that will be reflected in the guidance.
I have a brief question for the minister that we did not quite cover at the end of our consideration of amendments at stage 3. Is the minister in a position to outline a timescale for the commencement regulations for the bill? Should we expect draft regulations to come before the end of this calendar year? We would be keen to have more of an understanding of the timescale for that.
I was very glad about the minister’s commitment to take the next steps towards a cruise ship levy for Scotland. A cruise ship levy is distinctly different from the visitor levy, although there are some similarities. The Greens believe that a cruise ship levy should take into account the significant pollution and other impacts from cruise ships, not just passenger numbers. Given that there are cruise ships that can dock and depart on a single day, there should still be a way to apply that levy to them, even if there is no overnight stay in the local authority area.
Mark Griffin and Willie Coffey were right to point out that, although the bill will have significant benefits for some authorities, the benefits for others will be negligible. That is why it must be only one part of the picture when it comes to the fiscal empowerment of local government. There is a range of other options that we could take forward, including a demolition levy, an incineration levy and a large events levy. The Greens are certainly proud of those that are coming forward, such as the carbon emissions land tax, and what has already been delivered, such as the ability to double the council tax on second and holiday homes.
The Visitor Levy (Scotland) Bill is a good bill. It will become good law, it is well drafted, and Parliament has significantly improved it. The power is an important one that will have a positive impact on local communities, but it must be only the next step in the fiscal empowerment of local government, not the final step. We need to give local government in Scotland the power to really govern our communities. Our economy will certainly see the benefit of that if we do so and we take a leap of trust in our elected colleagues at local level.
18:22
Scottish Labour welcomes the completion of the bill process and giving local authorities the power to implement levies to help to pay for services to support tourism. We believe that it is right that councils have those powers and that, as various members have pointed out, a balance is struck between the framework that is set nationally and how the provisions are implemented locally. It is right that local authorities make those decisions themselves.
I appreciated the minister’s words when he re-emphasised that the Government does not wish to be prescriptive about how the money is used and does not believe that that would be appropriate.
Miles Briggs pointed out some of the challenges with framework bills, which we have talked about on numerous occasions in the Finance and Public Administration Committee. There is a challenge in getting a framework bill right, setting the outline, ensuring that the Parliament has proper scrutiny of it, and giving individual local authorities the freedom to make that work. There is a tension to be governed in how we legislate in those areas.
An ancillary benefit comes through empowering and building trust and capacity in local government, which has been in decline for so long. It is important that we support local government in that way.
Our tax base should be more varied, resilient and responsive. We should not think of the process as just an extractive process by which we try to take as much money as possible to fund the public services that we all want. We also have to think about taxation that is purposeful and behaviours that can incentivise and encourage. We should think about the intent of taxation in its broader sense.
The support for the tourism industry is critical, but it is also disruptive. Ross Greer pointed that out well. Different challenges present themselves in rural areas and in urban areas in bringing tourists, who are absolutely vital to our economy and society, into Scotland. We need to have a balance in respect of attractiveness to ensure that we bring people here. We need to ensure not only that Scotland is an attractive place to come to physically but that coming here is affordable for people. Daniel Johnson rightly set that out at some length. How do we get tourists to come here? He clearly pointed out the VAT issue. We should think sensitively about the weight that we put on our critical businesses as they try to build their own industry and ensure that we look for them to succeed.
I want to say a little bit about funding. I am absolutely clear that the funding from the levy should not—indeed, it cannot—be used to plug the gaps resulting from the huge cuts to council budgets that we have seen over many years. It cannot be used as a substitute. For example, the SNP Dundee City Council’s plan to close Broughty Ferry castle, Mills observatory and Caird Park golf facilities, which are vital tourism facilities in my home city, is driven by the Government’s decision to target local authorities for cuts year on year.
Jim Spence published a very useful column in The Courier today, in which he said:
“There’s scarcely a whimper from those in city chambers as the fiscal knife is plunged deep into Dundee’s back.
Instead there’s hand wringing acquiescence from our councillors and SNP MPs and MSPs as the city is skewered with cuts to services.”
It is absolutely right that we consider that context when we think about the money that might be generated by the levy.
Mark Griffin pointed out the Accounts Commission’s figures showing that 23.6 per cent of cuts have already been made to leisure and culture in Scotland, with very huge challenges being faced as a result. We also know that the broader cuts to our local authority budgets make health poorer and lead to declining education, less-safe streets and less-sustainable communities as we address the £6 billion black hole resulting from the Government’s decisions.
Colleagues are right to welcome the minister’s constructive engagement during the bill’s passage—I welcome that, too. We are glad to see movement on the measure, but it is vital that the levy is delivered sensitively, for the good of all our communities.
18:25
When the minister opened this short debate, he referred to the fact that there are visitor levies in many other countries in Europe, and he was absolutely correct in saying that. However, there is a point to be made in relation to Scotland and, indeed, the UK as a whole: we are a high-cost destination. I think that Daniel Johnson made that point.
The Scottish tourism index was published just the other day. That survey of 1,000 Scots showed that the number of holidays at home—holidays by Scots in Scotland—is down already this year. At this point last year, 44 per cent of Scots said that they expected to take a holiday in Scotland in the coming year. That figure is down to 40 per cent this year. We are seeing a drop-off in the number of people saying that they are going to take holidays in Scotland. That is not because people are not taking holidays. The figures indicate that outbound travel is up, so people are going elsewhere and are less likely to stay here.
According to the Scottish Tourism Alliance, complaints about the costs of holidaying in Scotland are driving those numbers. We know that we have high VAT in this country compared with other countries, and there is a good argument for reducing the VAT on hospitality, but that is a debate for another day. Other issues are hitting the sector. As we have debated in the chamber many times, the Government did not pass on the 75 per cent business rates relief for retail, hospitality and leisure that applies south of the border and has done for two years.
We see a range of regulations coming forward, including the regulation of short-term lets hitting the sector, and potential restrictions on alcohol advertising that could impact visitor attractions such as distilleries. Our concern about the proposed visitor levy is that, although there might be an argument in principle for visitor levies, the measure is coming at the wrong time for a Scottish tourism sector that is already really struggling with a rising cost base and, as we have heard, potentially reducing numbers of visitors.
Over the past year, we have heard a lot from the Government about the new deal for business. We have heard a lot from the new First Minister and the new Deputy First Minister about the need to put economic growth first. This legislation, if it is passed today, sends out the wrong message in that respect.
That is the argument in principle. If we look at some of the detail in the bill, we see—we heard this from my colleagues in the earlier debate—that the burden of collection of the new levy will be on businesses, which are sometimes very small and perhaps do not have sophisticated computer systems. They will have to bear the cost of collection. My colleague Pam Gosal also referred to the interaction between VAT and the levy, with the complication that that will sometimes bring to microbusinesses such as bed and breakfasts.
There is an issue that I raised during the stage 1 debate that has still not been addressed: motorhomes. I heard what the minister said earlier—that he will look at the matter again—but it is a very serious issue, because we are not levelling the playing field between people staying in motorhomes and people staying in bricks-and-mortar accommodation. There are already real concerns in many parts of rural Scotland, including along the north coast 500, about what happens when people hire a motorhome, perhaps somewhere in the central belt. They load it up with shopping and drive around without staying in regulated B and Bs or campsites, sometimes. They wild camp, and they put very little money into the local economy. They will be exempt from paying the visitor levy as it currently stands, whereas people who stay in B and Bs or in campsites will have to pay a levy, despite the efforts of Miles Briggs. There seems to be an inherent unfairness in that, so I welcome the fact that the minister is going to address the matter.
In my view, we have not had a proper assessment of the whole question of exemptions. As Miles Briggs said, the levy is not a tourist tax; it is an accommodation tax. For example, itinerant workers who have to go to a different part of the country to work, people visiting children in hospital, and flood victims who have had to move out of their homes on a temporary basis will have to pay the tax. I am glad that Jeremy Balfour was able to get his amendment relating to those who are disabled passed, but we should have gone much further in connection with exemptions.
When it comes to the use of funds, it is really important—and this point was made by a number of members, including Mark Griffin—that the levy cannot be a replacement for core funding for local government. It needs to be seen as additional funding that we can put towards measures that will benefit the tourism economy.
There is an argument in principle for a visitor levy, but, in our view, the bill has too many issues and too many problems in the detail, and it comes at the wrong time for the sector. I believe that the Government should have listened to business. For those reasons, we will vote against the bill tonight.
18:31
I thank members from across the chamber for their measured contributions, both during the amendment stage and, latterly, during the debate. Indeed, I thank them for their constructive engagement throughout the process over the past year. I am extremely grateful, and I think that the process that we have undertaken—even when there has not necessarily been agreement on the general principle of the bill—and the desire to work together show Parliament at its best. I think that the bill is stronger as a result. I agree with what Ross Greer said: it is a model of working whereby, in this era of minority government, we can effectively legislate and ensure that all views are reflected to the greatest extent possible.
I will turn to matters that members have raised during the debate momentarily, but at this stage I offer my sincere thanks to all those who have contributed to enabling the legislation to get to this stage. As has been touched on, the bill was first mooted back in 2019 through an agreement between the Scottish Green Party and the Scottish Government during the budget. I am very grateful for Green colleagues’ engagement throughout the process, both during and following the end of the Bute house agreement.
I am extremely grateful, in particular, to COSLA and to industry, which provided me and my officials with invaluable insight and expertise to ensure that what we have brought to Parliament as a bill, and the amendments that we have passed at stage 2 and stage 3, are generally additive and ensure that the legislation is the best that it possibly can be. I am particularly grateful to the range of industry bodies, including the STA and many others, for the dialogue that they have facilitated for the individual businesses that have taken time to engage directly with me and my officials as we have taken the process forward. That model is consistent with the new deal for business. For me, it is of the utmost importance, when we are dealing with any legislation, whether it be in the fiscal or regulatory domains that impact on business, that we bring to bear the lived experience and expertise of business. It is because of that engagement that we have been able to achieve legislation and to achieve what I think is a broad consensus at stage 3.
I also put on record my sincere thanks to my bill team, in particular to the bill team leader, Ben Haynes. The contribution of Scottish Government officials is outstanding across every area of policy, and I have been incredibly privileged to be supported by such a fantastic range of officials. They have played no small part in getting the bill to the stage that it has reached today.
I also pay tribute and thanks to my ministerial colleagues, including the Deputy First Minister, the Cabinet Secretary for Finance and Local Government, Ivan McKee, Richard Lochhead and Ben Macpherson, who, in previous roles, have had responsibility for the legislation and are directly accountable for its progress in getting to where it is today.
I turn to some of the individual issues that have been raised. I sincerely thank Miles Briggs for the way in which he lodged his amendments. I very much appreciate the sentiment and the intent that motivated the national exemptions that he brought forward. I reiterate my commitment—I hope that it was implicit, but I want to make it explicit—to continued engagement. Powers in the legislation allow for the introduction of national exemptions and, clearly, consideration of such exemptions will be a part of the statutory guidance. He made very important points.
I want to clarify that there is no inevitability that certain groups or categories of accommodation will be subject to a visitor levy. There is local discretion. Of course, any local authority that looks to introduce a visitor levy will be able to do so only following consultation not just with business and tourism organisations but with communities. The fact that there will be on-going engagement through the visitor levy forum provides an effective vehicle for ensuring that the voices of communities are represented. As we continue to monitor how the legislation is implemented, ministers’ doors will remain open for further engagement on issues of national exemption.
I recognise the points about variation. That is ultimately inevitable in any situation in which we seek to further empower local government. Throughout the process, I have sought to ensure that we can provide as much administrative consistency as possible between respective local authorities, while allowing for the policy flexibility to respond most effectively to the needs and assets of a particular area. That is extremely important.
I thank Liam McArthur for his contribution. I recognise the important issues that he has raised on a cruise ship levy. I reiterate the commitments that I made earlier. I recognise the particular importance of a cruise ship levy to his constituents and, indeed, to the constituents of other members who have a particular interest in how such a levy would be applicable to their area. Ministers remain committed to continued engagement in that area.
On the point about motorhomes and their impact, and a potential motorhome levy, which both Liam McArthur and Murdo Fraser raised, I reiterate my commitment to work and engage constructively. There are particular practical challenges—it is a multifaceted issue, as members appreciate, and I am sure that we all agree that a small minority of irresponsible users contribute directly to some of the issues that have arisen. However, I recognise the concern, and it is important that we continue to work constructively to identify what measures we can take forward in that regard.
A key issue that was raised by Daniel Johnson, Michael Marra and Murdo Fraser is the question of the overall economic, fiscal and regulatory environment in which accommodation providers and businesses in the wider visitor economy operate. I recognise that they are in a challenging environment. That is why requirements on consultation and engagement are at the heart of the bill, and why we have an expert group that is convened by VisitScotland, with industry and local government representation, to produce statutory guidance, with the Parliament and ministers being able to specify what that guidance will cover. That will be extremely important in ensuring that visitor levies, when being considered by local authorities in engagement with their communities, are proportionate and additive.
Fundamentally, as has been set out by the STA and others, if a visitor levy is implemented effectively by local authorities, it can be a force for good: it can promote economic growth and wealth creation; it can support entrepreneurship; and it can ensure that Scotland continues to maintain, grow and diversify that world-class tourism offering of which we are all, rightly, proud.
That concludes the debate on the Visitor Levy Scotland Bill at stage 3.
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Motion without Notice