Seòmar agus comataidhean

Thank you, Stacey. I want to open the question up to the pilot authorities.

On the minister’s comments about the need for sustained engagement—in particular, in response to my colleague Neil Bibby’s reference to the culture sector—I hope that he will also include businesses in that engagement. I will not move amendment 11.

Amendment 11 not moved.

Amendments 47 and 48 not moved.

Amendments 12 and 13 moved—[Tom Arthur]—and agreed to.

Amendment 49 not moved.

Amendment 14 moved—[Tom Arthur]—and agreed to.

Section 17, as amended, agreed to.

Sections 18 and 19 agreed to.

After section 19

The cost of doing business in Scotland is exceptionally high and recovery remains precarious following Covid and the cost of living crisis. That is further compounded by business rates, VAT, regulations on short-term lets and so on. It goes without saying that the industry cannot get behind the bill in its current shape. For that to happen, we must ensure that the visitor levy is as cost neutral to businesses as possible.

Around 2,000 to 3,000 smaller accommodation operators are not VAT registered. In fact, David Weston from the Scottish Bed & Breakfast Association told the committee that it often hears from its members that they are

“managing their turnover in order to stay below the threshold.”

We heard that, anecdotally, it can take a 50 per cent increase in turnover just to cover the cost of going over the threshold. However, only two businesses that operate below the VAT threshold were consulted for the business and regulatory impact assessment.

The Federation of Small Businesses told the committee that one of the main concerns is that members fear

“being pushed above the VAT threshold.”—[Official Report, Local Government, Housing and Planning Committee, 24 October 2023; c 22, 4.]

The financial memorandum does not even assess the financial impact on businesses if VAT is applied to the levy, nor has the Scottish Government provided any indication that it intends to revisit the financial memorandum or the BRIA.

My amendment 3 seeks to exclude those small and microbusinesses from falling off that cliff edge. I urge members to back amendments 3 and 5 in my name, which would exempt accommodation that has an annual turnover that is below the VAT threshold. Quite frankly, the levy will be a costly and complicated undertaking for all providers, but that is especially the case for small accommodation providers that do not even have an accounting system but instead use books and keep a diary.

Should amendments 3 and 5 be disagreed to, I ask members to support amendment 16 in my name, which would introduce provisions for businesses that operate under the VAT threshold to retain 20 per cent of the total of their first return in order to recover costs for set-up.

Under amendment 11, I have sought to address how net proceeds can be used to improve the tourism offering and, in turn, improve the prospects for accommodation providers that operate in an area. Although I recognise the pressing need to close local government budget gaps, businesses should not suffer as a result. It is important that, where possible, businesses see some return on this onerous undertaking.

As outlined in my amendment, businesses that are located in a local authority area should be included in any decision that the local authority makes as to how the net proceeds of the scheme will be used. That would allow local authorities to maintain freedom over how the net proceeds are spent, accompanied by the expertise and knowledge of local businesses. In the interests of growing the local economy and improving the tourism offering, I cannot see any sensible reason for my colleagues to object to amendment 11 in my name.

I am content to support amendments 38 and 39 in the name of Daniel Johnson. Amendment 38 would require the Scottish Government to

“define what ‘a small accommodation provider’ is”.

I will also be supporting amendment 42 in the name of my colleague Miles Briggs, which would introduce provision for a business impact assessment. Clearly, the business regulatory impact assessment, or BRIA, is outdated and flawed, so I would welcome local authorities conducting their own assessments prior to introducing or changing a visitor levy scheme.

The small accommodation sector runs on tight margins, and it already faces an endless barrage of regulations. The Parliament runs a real risk of sinking small businesses to fill the gaping black hole in the public finances. I urge members to protect Scotland’s small and microbusinesses, which are the backbone of local economies and communities, by supporting amendments 3, 5, 11 and 16 in my name.

I move amendment 3.

Thank you. You said that you do not want to give money back to businesses, so what do you propose? If the visitor levy goes ahead, businesses will have that burden. We know that local authorities will be able to take money out for the work that they do, but businesses will not. They will be taxed. What do you propose?

That is clear and what the minister said was factual. However, the fact is that the minister can make decisions here today, and he has the power to say that amendments can be made.

I will move on to the minister’s rejection of amendment 11. He talked about being open to other ways of ensuring engagement under section 17. I welcome the minister’s point and I hope that he will do something, if he is not putting it in the bill, to make sure that local authorities are engaging with those businesses. I have said that 2,000 to 3,000 small and microbusinesses will be affected if the bill pushes them over the VAT threshold.

How the money will be spent is also important. I have said many times to the minister that we must do more in the Scottish Parliament to give those powers to local authorities, but we must also ask the powers that be to engage more with small and microbusinesses. Although I welcome what the minister has said on that, there is much more to do.

The minister rejects my amendment 16, which calls for money to be given towards the increased burdens that businesses will face. I am a little bit worried about that, because businesses will be facing burdens. I ask the minister to say what solution he will find and how small and microbusinesses will pay for that burden—for the accounting that they will have to do—if that money does not come from the levy.

By rejecting my sensible amendments, the SNP-Greens have once again proven that the new deal for business is nothing but empty rhetoric. The bill is the last thing that the small accommodation and self-catering sector needs at a time when recovery remains uncertain for many. I am certainly with the industry in this and I am disappointed by the minister’s decision. I hope that, moving forward, the minister will consider the issues in the Scottish Parliament.

I press amendment 3.

Will Daniel Johnson take an intervention?

I just wanted to know whether you have a proposal.

Tourism is one of Scotland’s most important sectors. It employs hundreds of thousands of Scots up and down the country. I firmly believe in Scotland’s tourism sector and want to see it flourish. Although I can understand local authorities in places that are popular with tourists seeking to generate additional revenue to support local infrastructure and mitigate the impact of tourism on public services, the majority of the Scottish tourism and hospitality sector is financially fragile and still in survival mode. We should look to maximise opportunities for growth rather than creating additional regulatory, administrative or financial burdens.

I am disappointed that the minister has chosen to reject some sensible amendments. I am also disappointed that, instead of making decisions as a member of the Scottish Government, which he has the power to do, he has decided to pass on the VAT situation and say that it is to do with the UK Government and nothing to do with us pushing businesses over the threshold. He looks at exemptions and passes it on to local authorities to consider whether to apply any.

Good morning, minister and officials.

COSLA has raised concerns that creating additional administrative burdens on local authorities and their auditors is an unnecessary risk and an unnecessary additional burden. Have you discussed how that might impact on local authorities, and the best way in which to support it to deal with any additional administrative burdens?