Delay or ditch the visitor levy, firms beg DFM, or "half" may close

 

 

The Visitor Levy (Scotland) Act 2024, passed by Holyrood last year, allows councils discretionary powers to introduce a levy on overnight stays, raising income to provide facilities and services for visitors. 

 

Every local authority in the Highlands and Islands is considering the introduction of a visitor levy, and each is at a different stage of the process.

 

The furthest forward are Highland Council and Argyll and Bute Council, who are both running consultations on their visitor levy proposals, which conclude on March 31 and April 10 respectively. 

 

Moray Council is developing a proposal for its levy, while Comhairle nan Eilean Siar, Orkney Islands Council, and Shetland Islands Council are all investigating a levy’s feasibility.

 

Now a letter written by business owners and an MSP from the region, Conservative Tim Eagle, is calling on the Scottish Government to ditch the levy, or delay it.

 

The letter, to Deputy First Minister Kate Forbes, the SNP MSP for Skye, Lochaber and Badenoch, says: "We would ask you to give due consideration to abandoning the levy altogether or delaying its implementation in local authority areas where it is not appropriate given price sensitivities in rural and island economies dependent on tourism.

 

"The levy will undoubtedly lead to business closures and redundancies, and the administrative burden on micro and small businesses in particular will be immense.

 

"The five per cent levy being proposed by both Highland and Argyll and Bute Council’s is far too high and is likely to have a detrimental impact on the viability of many businesses.

 

"A recent Skye and Lochalsh Business Impact Survey undertaken by concerned business owners has shown that over 50 per cent of businesses will, or are seriously considering, closing given the financial challenges that the levy presents.

 

"The levy attracts VAT. There is nowhere in Europe where a tax on a tax exists. Estimates suggest that possibly in excess of 75 per cent of businesses in Highlands and Islands that will be affected by the visitor levy are not currently VAT registered.

 

"There is a real risk that the levy will push many businesses over the VAT threshold, forcing them to register for VAT.

 

"A five per cent levy will lead to an immediate tax increase of 26 per cent, as the levy itself will then be subject to yet another VAT charge.

 

"Most will not be viable as they will be unable to increase prices to cover the increased taxation.

 

"The ripple effect of closures and contraction of the numbers of accommodation operators will in-turn affect other businesses that rely on the visitor economy. Frankly, our communities will suffer.

 

"Fundamentally, we believe that the visitor levy scheme is the equivalent of using a hammer to crack a nut.

 

"There remains wider support for a flat rate charge on international visitors which is simple to administer and collect and (dependent on the level set) would be unlikely to significantly affect the viability of businesses across rural Scotland and in our Islands."

 

A Scottish Government spokesperson said: “The Visitor Levy (Scotland) Act gives councils the power to introduce a visitor levy in their area, if they think it is right and after they have consulted local businesses, communities, and tourism organisations.”