Edinburgh to become the first UK city to impose tourist tax

Edinburgh’s council is campaigning for the legal powers to introduce a levy on tourists due to its struggle with its many visitors.

In addition to the 20% VAT that UK tourists pay in hotels, beds and breakfasts, the levy refers to a ‘bed tax’ on hotel rooms and short-stay lets, and is aimed at curbing the growing resentment among residents about congested streets and scruffy public spaces. Officials also hope the levy will improve the city’s infrastructure, raising up to £27m a year.

The boom in tourism experienced in Edinburgh is largely due to its year-round series of festivals, concerts and firework displays, giving Edinburgh’s hotels an occupancy rate of 82%, the second highest in the UK.

Although the hotel industry continues to insist a new levy would be unfair and unjustified, Scotland’s council leaders backed the campaign today (28 June) and ministers from the Scottish National Party (SNP), who had previously refused to consider it, are now softening their views as an SNP-led coalition with greater influence in government runs Edinburgh.

Supporters of the tourist tax expect it to be in force within two years. However, hoteliers fear the levy, which is already used in Barcelona, Berlin, Amsterdam and Venice, will set the precedent for other cities such as London.

Willie Macleod, Scottish director of the industry group UK Hospitality, said: “Edinburgh seems hell bent on taxing our industry (but) there’s a limit to how much we can ask our customers to pay.”

Adam McVey, Edinburgh council leader, said these fears were unjustified as the council campaigned for a levy of £1 or £2 per bedroom per night, a price lower than the one used by other European cities and that is “less than a cup of coffee”.

McVey said: “To sustain the success that Edinburgh has in its tourism economy, we need to tackle the threats that exist to that. And one of the threats, to put it bluntly, is people in Edinburgh being fed up with the influx of people who come here.

“I don’t think we’re near the critical mass of putting a ‘no vacancies’ sign up in front of the city, but people do increasingly feel that way.”