Edinburgh and the City of Westminster both welcomed in the New Year with an announcement that they are considering imposing tourist taxes on visitors. The taxes, which would take the form of a levy on hotel stays, are already a feature of several other cities in Europe. Nonetheless, they have drawn criticism and approbation in almost equal measures.
The idea of a tourist tax in Edinburgh has been on the cards for almost a decade. It came into sharper focus last year when the Scottish government announced a consultation on the matter. Edinburgh Chamber of Commerce surveyed 200 organisations in the Scottish capital, and came up with the findings that 50% of respondents were in favour of the proposal. However, the Scottish Tourism Alliance pointed out that only 26 of those 200 respondents were from the hospitality and tourism sector. This raises an inevitable question over who exactly is in favour of a tourism tax and why.
Proponents of the scheme, and a similar one in London’s City of Westminster, argue that a tourist tax would raise important revenue that would go towards improving facilities and safety for tourists and locals alike. Businesses and residents in both Edinburgh and Westminster have raised concerns over matters as diverse as the number of public lavatories, illegal short-term letting, and police and emergency services’ coverage.
Berlin, Florence, Paris and Rome are all examples of European cities with thriving tourist industries that levy low taxes on tourists. Tourists in Berlin are charged an extra percentage on top of their room rate. Several Italian cities, including Florence and Rome, charge a fixed sum per hotel star, per person, per night. Meanwhile, the Catalonian government, which covers Barcelona, charges a fixed sum per person per night. Again, this is collected by the accommodation provider.
For some, the example set by these continental European cities suggests that a tourism tax is a sensible and reasonably cost-effective way of raising revenue that then can be reinvested into the local area for the benefit of all its inhabitants and visitors. For others, a tourism tax is not only unnecessary but potentially detrimental. They argue that not only should the necessary funds come from elsewhere (whether from central government or local sources) but that tourist taxes deter visitors, especially during times of general economic stress. Additionally, they suggest, with taxes collected via hotels, tourists may seek to avoid paying by seeking out alternative accommodation. This exposes hotels to obvious economic pitfalls and may force them to consider paying the tax themselves rather than passing it on to guests.