Cruise ship levy: consultation

2. The Policy context

There are several elements to the policy context around a potential cruise ship levy in Scotland. These include the shape and size of the cruise ship sector in Scotland; the importance of tourism in Scotland; the Verity House Agreement with local government; the principles underpinning the Scottish Government’s approach to taxation; and island communities. All of these aspects are an important part of the overall context, and they are covered in turn below.

2.1 Cruise ship visits in Scotland

Analysis carried out by the Scottish Government has identified approximately 1,000 cruise visits to Scottish ports in 2024, with a combined passenger capacity of 1.2 million^[1]. This is an increase from 2019, when there were an estimated 893 cruise ship calls bringing 817,000 passengers (Ekosgen, 2020). The areas scheduled to welcome the most passengers were Invergordon, Orkney, Edinburgh, Lerwick, and Greenock, and the average ship in the five busiest ports carried over 1,000 passengers.

The number of passengers who disembark from a ship will vary by ship and port, and will be influenced by multiple factors such as the attractions available on shore and even the weather that day.

Cruise passengers make up approximately 2% of the total number of overnight stays by visitors in Scotland (‘visitor nights’)^[2]. However, it is worth noting that in some parts of Scotland cruise passengers make up a much higher percentage of the number of visitors. For example, in 2018 84% of overnight visitors in Orkney, and 79% of those in Shetland, were cruise ship passengers (Ekosgen, 2020, Table 3.3).

The sector is also highly seasonal, as shown in the chart overleaf. Arrivals start from March and extend to November, but 97% of passengers in 2024 were scheduled to arrive between April and September, with 60% in the busiest three months of June to August.

Source: Scottish Government Analysis of Cruise Schedules

The arrivals are therefore unevenly spread over time. One large cruise ship can bring several thousand people at once, and the ship generally departs on the same day. The busiest day identified at a single port in 2024 was in Invergordon, where 9,600 people were due to arrive on one day in September.

The cruise sector was severely affected by COVID, with a large reduction in passengers in 2020-2021. Since 2022 the sector has enjoyed a rapid recovery. Industry figures from 2023 show that cruise tourism around the world has recovered more quickly than other forms of international tourism (CLIA, 2024a), and the number of cruise passengers in north Europe was around 30% higher in 2023 than in 2019 (CLIA, 2024a). Cruise operators have increased orders for new ships to meet the growth the sector expects to continue, and these ships are generally larger than those that have come before (CLIA, 2024a). It is not known exactly how this will affect the size of ships visiting Scotland, but the general trend is towards larger vessels.

2.2 Tourism in Scotland

The tourism sector is a crucially important part of the Scottish economy. It creates jobs, sustains communities and local economies, and enables visitors and residents alike to experience the strong tourism offer we have here in Scotland. In 2023, domestic and international overnight visitors made 16.4 million visits to Scotland, spending 69.8 million visitor nights here (Visit Scotland, 2024; Visit Scotland, 2024a). In addition Scotland’s tourism sector makes a significant contribution to the economy, comprising around 16,000 businesses (9% of all businesses) and employing 245,000 people (9% of all employment) in 2023 (Scottish Government, 2024).

The tourism sector in Scotland is aligned around Scotland Outlook 2030, the national tourism strategy. Launched in 2020, Scotland Outlook 2030 outlines a clear vision for the future of the tourism industry. The Scottish Government worked closely with the sector to develop the strategy, and it sets out the shared ambition for Scotland to be the world leader in 21^st century tourism and to be one of the most economically, environmentally and socially sustainable destinations in the world.

2.3 Verity House Agreement

In June 2023 local and national government signed the Verity House Agreement. This Agreement sets out principles for the Scottish Government and COSLA to support work together on a number of issues, including the economy, public service, and tackling poverty. The Agreement is part of the New Deal with Local Government, which includes a commitment to provide greater flexibility for local authorities over financial arrangements. This commitment includes consideration of further revenue raising powers for local government, including a potential cruise ship levy.

2.4 The Scottish Government approach to taxation

The Scottish Government's approach to taxation has developed over time following the devolution of tax powers in 2012. The Framework for Tax sets out the principles and strategic objectives that underpin the Scottish Approach to Taxation, as well as our approach to decision making, engagement and how we manage and sequence tax policy and delivery (Scottish Government, 2021). Building on the Framework for Tax principles, Scotland’s Tax Strategy sets out medium-term ambitions for how the tax system will develop to support the delivery of our four government priorities: eradicating child poverty, growing the economy, tackling the climate emergency, and ensuring high quality and sustainable public services (Scottish Government, 2024a).

These principles will support delivery of a fair and progressive tax system, which aligns policy aims with outcomes, is informed by robust evidence and engagement with others and takes a strategic view of the tax system. The development of any cruise ship levy will follow the principles and strategy set out by the Scottish Government in the documents referred to above.

2.5 Island Communities

Our islands bring a crucial contribution to Scotland’s society, culture and economy. Every island is different, with its unique set of challenges, opportunities and ambitions. Under the Islands (Scotland) Act 2018, the Scottish Government and 70 other relevant bodies have a duty to consider issues that affect island communities in the development and delivery of their policies, strategies and services.

A potential cruise ship levy has a particular relevance to island communities, given that cruise ships calls at islands can bring both benefits and pressures to island communities in a way that differs from port calls on the mainland. As noted above cruise ship passengers also form a large percentage of visitors to some islands. To reflect the prominence of cruise tourism in island communities one of the four national roundtable discussion events was held in Kirkwall, and we look forward to hearing the views of island communities in response to this consultation.