The Scottish Tourism Alliance (STA) has said that their member businesses are reporting difficulties in calculating the five per cent tourist levy.
This is the new tax which must be charged in Edinburgh on the overnight accommodation portion of any bill. And STA report that mistakes are taking their members around eight minutes to correct.
The tourism body say that corrections could run into millions of pounds, casting doubt on the collection process – which accommodation providers are responsible for – and the two per cent which the businesses keep as a recompense for the extra administration.
The STA has demanded scrutiny of the impact of the tourist tax in Edinburgh on “wider visitor spending” and say that the costs outweigh the benefits.
The organisation is also keen for all 32 councils in the country to learn from what it calls “problems being experienced in Edinburgh”, one month after the levy came into effect.
Edinburgh charges five per cent on overnight accommodation capped at five consecutive nights, but businesses such as hotels and guest houses, which are responsible for collecting the tax and passing it on to the council, have reported problems in implementing the percentage model. They say that they have difficulties “in the way the levy is being handled by some booking platforms”.
Their main issue is that the levy is not charged on non-accommodation extras such as food and this is “forcing additional work and complexity”. Operators report having to correct individual bills where the levy has been incorrectly calculated. Some say that it takes eight minutes to correct one bill.
STA have always argued for a fixed fee model. Edinburgh discounted that option early on in the process, but councils have been given the power to charge the tax on a fixed fee basis after the Visitor Levy (Amendment) (Scotland) Bill was passed by The Scottish Government in March this year.
Glasgow, Aberdeen, Stirling and West Dunbartonshire have all adopted a percentage model, but Highland Council has opted for a fixed fee of £5. The accommodation providers will be allowed to retain 5% of the tax raised as an administrative fee.
Marc Crothall, MBE, CEO of STA
Marc Crothall MBE, Chief Executive of the Scottish Tourism Alliance, said: “We always knew there would be challenges with the percentage model and we are now starting to see some of those coming through. Calculating a percentage may seem simple, but the reality is causing major problems for businesses.
“Some of the booking platforms are not yet set up to work with the percentage model properly and accurately remove non-accommodation elements from the final levy calculation, and that means businesses are having to go back and correct bills. That takes time, and it costs money.
“When you multiply that across the number of bookings being made in Edinburgh, it becomes a significant cost. This could run into millions of pounds, so we need to understand the true cost and whether the 2% businesses can retain for administration comes anywhere close to covering it.
“The last thing we want is for a guest to get to the end of their stay and be presented with a bill which isn’t accurate. It doesn’t reflect well on the business, and it doesn’t reflect well on Scotland as a visitor destination.
“The fixed-fee approach is what we have been advocating and what we pushed for when the legislation was changed. It is simpler and, importantly, we know the booking platforms can accommodate it.
“But there is still a big question around what that fee should actually be. How do we know £5 is the right figure? Could it be £3? What impact will it have on bookings and jobs?
“That is why the economic impact assessment is so important and has to be done before a council agrees what level of fee, if any, can be introduced without causing more harm than good.
“We need to know what happens to the rest of a visitor’s spend when they are paying the levy. Are they spending less when they go out for dinner? Are they spending less in shops and attractions? Are they shortening their stay? Are they booking fewer Fringe shows? We need real-time information to get a true picture of whether the money raised from a visitor levy outweighs the negative impact on the wider visitor economy.
“The levy is here in Edinburgh, and it needs to work. What we are saying to other councils is: look at what is happening there, listen to the industry, carry out a detailed economic impact assessment and work with us to get the implementation right.”
Edinburgh Council has been asked for comment.
A recent development transformed the long-vacant Osborne House in Edinburgh’s Haymarket into a hotel
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