Tourist tax will be ‘death knell’ for businesses, former minister warns

Plans to introduce a tourist tax in the Highlands will be the “death knell” for many businesses, a former minister has warned.

Fergus Ewing said the council’s plans for a visitor levy were “outrageous and poorly designed”.

The SNP MSP for Inverness and Nairn said the tax was “uncollectable” and would lead to a “fiasco”.

Highland Council has been consulting on proposals for a 5% visitor levy that it says could generate at least £10 million for the region.

It says the cash could be used to help pay for improvements to infrastructure, including on its roads.

The Visitor Levy (Scotland) Act was passed last year and allows councils to apply a tax on overnight stays.

But it has been opposed by chambers of commerce in the area, as well as trade bodies representing hotels.

Appearing before Parliament on Wednesday, Ewing called for a U-turn.

He told public finance minister Ivan McKee: “All four ministers know I have opposed this tax from the outset and voted against it.

“It is a percentage tax upon which there will be additional VAT payable – two sets of tax.

“The minister knows that I have argued that this is uncollectible, is going to lead to a fiasco, that nobody has worked out how to collect it, that the IT systems that will be necessary to administer it do not exist.

“Does the minister agree with me that this may cause the death knell, the death knell, of many hard-working, excellent bed and breakfast establishments in the Highlands and throughout the whole country, and he has been told this again and again.

“So will he call a halt to this outrageous and poorly designed tax?”

McKee said it was up to local authorities whether they implemented a tourist tax but added that he would meet with Highland Council to discuss its plans.

He went on: “The tax is obviously in legislation, as the member is aware, and Edinburgh City Council will be the first council intending to take the tax forward next year, and as I say, we will continue to engage with other councils as we learn from that implementation, to understand what their plans are in their own local areas.”

Douglas Ross, the former Scottish Tory leader, said the policy would impact Highland residents who would have to pay for overnight stays in different parts of the region.

He called for residents to be exempt from the policy from the outset.

McKee said he was “well aware” of the concerns raised by trade bodies but reiterated that it is up to the Highland Councils whether to implement the policy.

He said the Visitor Levy (Scotland) Act gave local government “the most significant new powers” since devolution.

“Many businesses and business organisations absolutely recognise the value that the levy can bring,” he added.

“The levy will help, therefore, sustain and enhance the visitor experience, making destinations more attractive and competitive.”

Highland Council has been approached for comment.