Expert Insight
NEWS from
With the confusion regarding Brexit penetrating almost every aspect of daily business, it is sometimes easy to forget that work on the domestic agenda does not stop. That’s the case in Scotland, at least, where next month the Scottish Government wraps up its consultation on the proposed introduction of a tourist tax.
A possible tax on overnight stays has been kicked around in Scotland for a little while now. Edinburgh City Council has been a very vocal champion of the measure and has repeatedly called for powers to introduce one in the city. The Council even went as far as to survey the appetite for the tax, rather disingenuously claiming that it had the full support of business. Following a dramatic injury-time inclusion in the Budget, as a way of keeping Scottish Green Party MSPs onside to avoid an election-inducing defeat of the Budget, the Government in Holyrood is now seriously considering it.
Part of the rationale for introducing such a tax is the presence of similar ones in Europe. In most EU countries that do levy a tax on overnight stays, they also have a reduced rate of VAT on hotel services. There is not likely to be any such VAT reduction in Scotland so costs will continue to pile up.
Cash-strapped local authorities in Scotland may lick their lips at the prospect of a revenue-raising tax that doesn’t affect their council tax-paying residents. What it will affect, though, is their very important rates-paying businesses. Hotels make huge contributions economically – providing jobs and tax revenue – as well as culturally,
6 November 2019
www.venue-insight.com
helping make Scotland a world- renowned tourist destination. The problem is that Scottish accommodation businesses already pay disproportionately towards local authority funding. Property taxes in the UK are already the second highest of any country in the OECD and hospitality businesses are already the most penalised by the current, out of date, business rates system. Bearing this in mind, there simply is no economic justification from heaping yet another cost in already-stretched businesses.
In fact, there does not seem to be much consistency in the rationale for introducing a tourist tax, what the problem might be or how introducing a tax might address it. Is the tax there to support destination development marketing and management in Scotland, to tackle the problem of over-tourism? Will the tax be used to underwrite new and existing cultural offerings or meet a general shortfall in public funds? If the tax is introduced and it leads to a significant drop in the number of overnight stays in Scotland, will it be deemed a failure or a success? The same question applies if the tax has no appreciable impact on the number of stays. What is it there to achieve beyond ramping up costs on businesses at a time when political and economic confidence is so shaky?
Kate Nicholls UKHospitality Chief Executive
Government Must Act on Business Rates Report, Says UKH
UKHospitality has welcomed the House of Commons Treasury Committee’s report on the Impact of Business Rates on Business.
UKHospitality Chief Executive Kate Nicholls said: “We’re pleased to see the Committee recognising the burden of business rates has grown and the system no longer works. The current system is nowhere near flexible enough and it has directly contributed to the decline of high streets.
“Hospitality businesses are at a particular disadvantage and have been arguably hammered worse than any other sector. The current system penalises businesses who invest in their properties and actually acts as a deterrent to investment. We need a complete rethink of the system and an overhaul to bring it in line with the 21st Century.
“We are pleased that policy-makers are listening to the concerns of businesses and acknowledging that there must now be action. There must be, as the Committee recommends, a consultation at the soonest opportunity to identify alternatives to the current system. The incoming Government must act on this as a priority. We will be keeping up the pressure with recommendations to ensure fairness for hospitality.”
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