Scotland’s tourism and hospitality industry has today urged the Scottish Labour Party to urgently reconsider its proposals for a tourist tax which is essentially a tax on visitors who use commercial accommodation.
In a firmly-worded letter to senior Scottish Labour politicians, Willie Macleod, executive director of the British Hospitality Association (BHA) in Scotland, calls the tax “discriminitory and iniquitous”.
He says that far from helping stem a slump in tourism for destinations like Edinburgh, the tax will have the opposite effect. “The idea of a tourist tax shows that Labour in Scotland has completely failed to understand the market conditions affecting one of the country’s most important industries and one of its biggest job and economic growth engines.”
“Scotland’s competitive position as a tourist destination will be harmed if this form of tax is introduced,” he continues in the letter.
The BHA acts as a voice for Scotlands hospitality industry and more than 250,000 people who work in hospitality in Scotland.
He adds: “We believe that this is not only discriminatory towards hotels and other commercial accommodation providers but that it unfair to single-out the accommodation sector as the means of collecting such a tax when there are many other types of business which benefit from tourism and whose customers will not be taxed under Labour’s flawed proposals.”The BHA said it was also concerned that the introduction of a tax (proposed at £2 per person per night) was being used by Labour to resolve local government's financial difficulties.
The letter continues: “Imposing an additional tax on hotel guests will put further pressure on the profitability and viability of high-service, labour-intensive, low-margin businesses which are struggling to cope with additional costs including the National Living Wage, pensions auto-enrolment and the effects of rate parity clauses imposed by global on-line travel agents.
The UK is already a high tax destination for visitors and is ranked by the World Economic Forum as 140th out of 141 countries in terms of tourism price-competitiveness. The imposition of a tourist tax on top of VAT at 20% will further undermine the competitiveness of Scotland as a visitor destination. The UK is one of only three EU countries which do not have a reduced rate of VAT on hotel and tourism services. Moreover, the majority of EU countries which apply some form of tourist tax apply VAT to tourism at around half the rate applied in the UK.
Tourist spending is worth over £4.6bn to Scotland and this has the potential to increase by £1bn over the next 4 years if the right conditions are in place to enable the indutry to flourish. The hospitality industry
Mr Macleod continued: “The hospitality industry alone directly employs 256,000 people and has created 34,000 jobs in Scotland since 2010. It makes an important contribution of £4.6 bn per annum in GVA to Scotland. An extra and unnecessary tax is simply risking growth and jobs as well as deterring investment unless some form of offset such as a significant reduction in tourism VAT is made.”