Edinburgh has become the first city in Scotland to implement a tourist tax, introducing a five percent levy on accommodation starting Friday. Business leaders and industry groups have voiced concerns that the tax, officially known as a visitor levy, could make the city unaffordable and damage its tourism trade.
The Labour-led City of Edinburgh Council states the surcharge, applied to the pre-VAT cost of the first five nights in various types of accommodation including hotels, self-catering units, and hostels, is expected to generate £50 million annually. These funds are designated for public realm improvements, street cleaning, and policing.
However, the Scottish Tourism Alliance (STA) expressed apprehension, suggesting the levy could cause more harm than good. STA chief executive Marc Crothall warned that the tax risks Scotland's price competitiveness and might lead to shorter stays and reduced spending by tourists. "A visitor levy has always threatened Scotland’s price competitiveness and risks creating a tipping point that many visitors will be unwilling to pay, further impacting the declining market," Crothall stated.
Concerns have been amplified by the fact that VAT is charged on top of the levy, effectively doubling the tax for consumers. This comes at a time when Scotland is already considered an expensive destination. The Scottish Ballet has shortened its December production of "Cinders" in Edinburgh due to the tax, and the Edinburgh TV Festival is relocating to Manchester next year after 50 years in the capital, citing accommodation costs for its 2,000 delegates.
Scottish Conservative local government spokesman Alexander Burnett criticized the levy as a "great tourist tax experiment" by the ruling party, asserting that it will introduce confusion, increased costs, and red tape for hospitality businesses during a challenging period.
Examples of the tax's impact are already emerging. A three-night stay at Edinburgh's Sheraton Grand during the early days of the Fringe festival is priced at £1,596, which includes approximately £60 in tourist tax. A Premier Inn stay in the city center, costing £956, includes nearly £40 in tax.
Other Scottish cities are also planning to introduce similar charges. Glasgow intends to implement a five percent levy in January, while Aberdeen is set to introduce a seven percent charge in April.
Edinburgh Reform MSP Angela Ross commented that the tax unfairly penalizes tourists for staying overnight in a popular city. Garry Clark of the Federation of Small Businesses highlighted the additional administrative burden on businesses, including collecting the levy, training staff, and adapting to new systems during a demanding operational period.
Council leader Jane Meagher defended the tax, noting that similar schemes operate successfully in cities worldwide and that Edinburgh's 5 percent rate is modest.