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The National (Scotland)
The National (Scotland)
National
Laura Pollock

Business leaders urge Highland Council to delay tourist tax

THE Federation of Small Businesses (FSB) has urged Highland Council to "take extra time to develop more robust plans" for its proposed tourist tax.

The Visitor Levy (Scotland) Act was passed in May 2024 and enables councils to apply a levy on overnight stays.

Highland Council has said the money could be used to support infrastructure which is under pressure due to a huge number of visitors, particularly due to the impact of the popular NC500 road trip. It is expected the levy will come into force in 2026.

The statutory public consultation for the levy closes on March 31 and FSB has responded. 

The organisation said the levy had the potential to deliver extra targeted investment to further improve the experience of visitors to the Highlands, but urged for more work to be done to secure the support of the small businesses "who will be key to making it a success".

Recommendations include allowing time for a full assessment of the impact on smaller accommodation providers, such as B&Bs and hostels, as well as caravan parks and camp sites.

Other recommendations include publishing a detailed plan for how the funds generated would be invested to improve the Highland visitor economy.

Mike Duncan, FSB development manager for North Scotland, said: “The tourism industry in the Highlands is fragile. It is still recovering from the pandemic and has the added challenge of being seasonal.

“There is a great deal of uncertainty about the impact of the levy, especially on many of the small accommodation providers who are such a large part of the tourism industry in the Highlands.

“What happens to those who are pushed above the VAT payment threshold by virtue of the fees they collect on behalf of the council? That would generate the legal requirement to register for a second tax, VAT, and adhere to extra UK Government legislation. Some may even decide it is too much trouble and close their business altogether.

“There are also concerns about the potential impact on caravan parks and camp sites. With the proposed levy making licenced sites more expensive, this could inadvertently encourage the less desirable types of camping that Highland communities are worried about.”

FSB are proposing a Business and Regulatory Impact Assessment (BRIA) to allow fuller consideration of risks and potential mitigations, but also an assessment of whether a levy lower than the proposed 5% may be affordable.

The group hopes a levy lower than 5% would reduce any impact on business turnover.

Duncan added: “Businesses need to be convinced of the benefits of the proposed levy. Developing and publishing an investment plan and delivery programme could go a long way towards doing that.

“We don’t believe there is sufficient time to deliver these plans and everything else required for a successful launch under Highland Council’s existing timeline.

“The visitor levy has the potential to deliver valuable targeted investment in the Highland visitor economy, but we have yet to see the detail of how the money raised would be spent. The expectation of tourism businesses is it will focus on improvements to infrastructure and facilities across the Highlands, as well as business support, visitor attractions and destination marketing.

“It is vital the small businesses who will be responsible for collecting and administering the levy have a voice when it comes to these decisions, including on the forum required to be set up in order to steer decision making on levy revenue investment.

"FSB will continue to work constructively with Highland Council to ensure the concerns of these businesses are heard.”

Members of Edinburgh Council agreed plans in January to introduce Scotland’s first-ever visitor levy.

Visitors staying in the city will have to pay a 5% fee per night, capped at seven nights – which is expected to raise up to £50 million a year for the local authority.

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