Explainer: What is the Visitor Levy (Scotland) Bill?

Scotland plans to allow local authorities to introduce a visitor levy, also known as a “tourist tax”. The Visitor Levy (Scotland) Bill was first introduced to Holyrood on 24 May 2023 and proposed that councils could raise a tax revenue from tourists for public expenditure. 

MSPs will begin debating the bill today, with many local councils, most notably Edinburgh City Council, very eager to implement the tax as soon as possible. But how much will it cost? How will the money be used? And why now?

How will the levy work?

A visitor levy is an additional charge paid on overnight accommodation. Such a charge was first introduced in the UK by Manchester in April of last year to promote sustainable tourism. Many European cities, such as Amsterdam, Barcelona, Berlin, Paris, and Rome also charge a visitor levy to raise income to reinvest in local services, infrastructure and visitor attractions.

The proposed charge type for Scotland will be a percentage of the accommodation booking minus any room add-ons (parking, entertainment, food and drink etc.). The levy is paid by the visitor to the accommodation provider; the council then collects all levy payments from the providers to reinvest as it wishes. Note that this is subject to change and will only be confirmed if and when the final bill is passed by Holyrood.

Why have a Visitor Levy?

The purpose of a visitor levy is to raise revenue from visitors who temporarily stay in the city and use the city’s local services. Edinburgh and Glasgow in particular want to use the levy to support their local services and improve their capacity to manage the growing influx of tourists.

In Edinburgh, the tax could become a central feature of the council’s long-term strategy for a sustainable visitor economy, set out in Edinburgh Tourism Strategy 2030. The city’s attracts 4.5 million visits a year, who spend around £4 million in the city each day, so the tax has serious economic potential.

However, many local campaigners are worried that the lion share of proceeds will be used for an already inflated tourism industry and not for desperately unfunded local services and infrastructure. Amid a crisis in funding, with a housing emergency declared last year and leisure centres rumoured to close, campaigners argue that the levy is exactly what the city needs to revive its struggling services.

Indeed, the Cockburn Association, Scotland’s oldest architectural conservation charity, has said in an online statement that the levy must be used to protect the capital’s “historic architecture and townscape” from tourist events such as the Fringe and Hogmanay. “The levy must be used to ameliorate the impacts of overtourism, not increase them”, it argued. 

But not everyone is excited about this proposed “new deal” for Edinburgh. Business leaders in the tourism and hospitality industry are concerned that the levy could have unintended consequences by discouraging tourism altogether and hamper their Covid-recovery efforts.

When will the levy be introduced?

This depends on the pace at which the bill passes through Holyrood. Based on current timescales, the earliest a visitor levy could be applied in Scotland is 2026.