In context: Cruise Ship Levy Consultation

What is it about?

The Scottish Government is seeking views on its proposal to allow local authorities to apply a visitor levy to cruise ship passengers. The consultation closes on 30 May 2025.

If introduced, Scotland would be the first place in the UK to have such charge. However, a nationwide levy has been ruled out.

Where did the idea come from?

In short, the idea stems from the introduction of the Visitor Levy (Scotland) Act, which gives local authorities the power to impose a tax on overnight accommodation. During the passing of the act, ministers were pressed to introduce a similar tax on cruise tourists.

As a result, the government pledged to launch a consultation and “intensify work” on creating a cruise ship levy in its latest Programme for Government, launching a series of roundtables with stakeholders on the matter.

But hasn’t this been consulted on before?

Yes. In 2019 the idea was considered during a consultation on visitor levies. However, respondents were divided on the proposal. Businesses and port operators opposed it while local authorities were split. Ultimately, the government decided to drop the proposal.

What do local authorities think now?

There seems to be quite the division still.

At the roundtables, those who argued for the levy cited potential positive economic impacts and that it would bring cruise visitors into line with tourists staying in local accommodation, while those who sided against it cited its potential impact on passenger numbers.

How big is the cruise sector?

The industry has experienced a boom over the past five years.

Government research showed that last year the country hosted around 1,000 cruise visits and more than one million passengers, a 10 and 15 per cent rise respectively compared to 2019.

The cruise sector is particularly big in island communities. For both Orkney and Shetland, cruise ship passengers account for around 20 per cent of all visitors.

How much revenue would it bring?

Edinburgh City Council estimated that a £5 levy could bring more than half a million pounds in revenue, and in Orkney it could raise more than £1m.

Who would be exempt?

The government does not plan to apply the tax on ferry services or those visiting in private boats or yachts and not carrying passengers. However, given the importance of the sector on island communities, the consultation considers whether these should have an additional power to create a broader ‘point of entry’ levy for one or more islands in their area.

Such a measure is backed by Orkney MSP Liam McArthur, who argued it would remove the “administrative burden and cost from small local accommodation providers” as well as help ensure the levy does not impact residents travelling for work, health and family reasons.  

The consultation also questions if cruise passengers who are disabled, under 18s, paid carers or crew members should be exempt of the charge.

What will the levy be based on?

The consultation lists four potential measures on which to base the tax charge: the gross tonnage of the vessels, its passenger capacity, the numbers of passengers on board, or the numbers of passengers that disembark at the port.

It also asks whether the tax should consider when a vessel has “poor environmental credentials” – an issue taken into account in levies implemented at other destinations such as Barcelona.

So local authorities would be fully in charge of the levy?

Potentially.

The consultation considers whether the rate should be set nationally or locally. While the former would be simpler and clearer for cruise companies, the latter is likely to better reflect local circumstances and views gathered in local consultations.

However, there are concerns that failing to have a nationwide co-ordinated approach could bring a competitive disadvantage for areas with a higher levy.

Another option would see an upper limit set nationally, giving councils the flexibility to set a rate below that figure.

What else does the consultation consider? 

Other asks include potential implementation times for the levy, transition arrangements and how revenue should be used.

What do people think?

The Scottish Greens support the levy, describing it as a “crucial step” to mitigate climate change. Highlands and Islands MSP Ariane Burgess said it would prevent residents from “picking up the bill” of the pressures that cruises, which she described as “one of the dirtiest and most polluting forms of travel”, have on local infrastructure, environment and services.

However, the British Ports Association has spoken out against it. Its director of policy and external affairs Mark Simmonds said local levies would “confuse” cruise industry planners and “threaten growth and investment across Scotland”.