The Principles of a Local Discretionary Transient Visitor Levy or Tourist Tax

7. Further considerations

This final chapter sets out responses to the questions covering the name of any visitor levy, requirements to ensure accommodation prices transparently display a visitor levy, transition arrangements and assessment of impact.

Messaging and transparency for prospective visitors

Countries that have introduced a visitor levy have done so under a variety of names including 'transient visitor levy', 'tourist tax' or 'visitor levy'. The consultation sought to understand if different permutations of the name might have unintended consequences, for example in not being transparent when translated into other languages or introducing some level of negative or incorrect inference.

Question 27: Is the name 'visitor levy' appropriate for the new powers proposed in the consultation document?

Please provide a reason (or reasons) for your answer.

Responses to Question 27 by respondent type are set out in Table 18 below.

The largest group of respondents, 47% of those answering the question, did not think the name 'visitor levy' is appropriate for the new powers proposed in the consultation document, while 37% thought that it is appropriate and 15% did not know. Accommodation provider (other) respondents were likely to disagree as were Tourism and hospitality industry representative organisation respondents. Other groups were fairly evenly balanced, apart from Local authority respondents who were likely to agree with the proposed name.

Table 18

Question 27: Is the name 'visitor levy' appropriate for the new powers proposed in the consultation document?
Respondent type	Yes		No		Don't know		Not answered	Total
	N	%	N	%	N	%	N	N
Individuals	98	44%	93	42%	32	14%	52	275
Accommodation provider (hotel)	3		8		3		35	49
Accommodation provider (other)	11		39		8		9	67
Business organisation	2		1		1		3	7
Community council or residents' association	1		1		1		2	5
Heritage or culture organisation	3		1		3		5	12
Local authority	9		5		5		3	22
Other	2		2				1	5
Other representative organisation	1		2				2	5
Other tourism or hospitality business or organisation	2		4				1	7
Port authority			1				2	3
Professional body	3		4				3	10
Public body			1				5	6
Tourism and hospitality industry representative organisation	1		7		1		1	10
Tourism development or promotion organisation	3		5		2		1	11
Trades union, political party or campaign organisation			1		1		3	5
Total organisations	41	28%	82	55%	25	17%	76	224
All respondents	139	37%	175	47%	57	15%	128	499

Question 28: If not, what do you consider to be a better alternative and why?

Further comments at Question 27 tended to be brief and often covered both Questions 27 and 28. A single analysis across these two questions is presented below.

Respondents who thought 'visitor levy' is appropriate commented that the name is clear, easy to understand and is a good and fair description of the charge. There was also a view that 'levy' sounds better and is a less emotive description for the charge that 'tax'. A specific point was that because visitors already pay VAT on their booking the application of an additional charge labelled as a tax would be likely to cause confusion among visitors.

Those who did not agree with the use of 'visitor levy' generally took the view that the charge is a tax and should be described as such, with any other approach being misleading. There was also a view that the Scottish Government is trying to avoid using 'tax' because it is a term that has negative connotations. Other comments included that 'tax':

• Is a more easily understood term than levy, especially for international visitors.
• Emphasises aspects of contribution to local infrastructure or combatting environmental impact. Similar points were made by some respondents who favoured the use of 'levy' but suggested alternatives to 'visitor'.

A range of alternative names were suggested, with the two most frequently suggested being tourist or tourism tax or visitor tax.

Other suggestions for tax-related names included: Scottish Tourism Tax; Local Tourism Tax; Bedroom or Accommodation Tax; Hotel Occupancy Tax; Local Area Support Tax; Visitor Infrastructure Tax; Environmental Tax; Tourism Environmental Tax; or Disembarkment Tax.

Alternatives for levy-related names were also proposed including: Tourism Levy; Tourism Business Levy; Visitor Accommodation Levy; Day Visitor Levy; Visitor Impact Levy; Contribution Levy; Visitor Giving Levy; Tourism Investment or Improvement Levy Fund; Visitor Benefit Levy; Local Infrastructure Levy; Local Improvement Levy; Local Conservation Levy; Local Stewardship Levy; Responsible Tourism Levy; or Sustainability or Green Tourism Levy.

Other suggestions were: Tourist Duty; Visitor or Local Tourism Fund; Visitor Payback; Visitor Contribution; Visitor Contribution to Local Services; Visitor Gifting; Local Area Facilities Charge; or Social Infrastructure Amenity Improvement Fund.

The consultation paper notes that an important consideration for implementation of a visitor levy is the need for transparency in accommodation pricing, including clear information to ensure prospective visitors are aware of the visitor levy and how and when they will pay this. Under existing law accommodation providers already must clearly display the price of their accommodation and any VAT which applies to their prices.

Question 29: What requirements should apply to ensure accommodation prices transparently display a visitor levy?

Please provide a reason (or reasons) for your answer.

Some respondents simply expressed a view that there should be no requirements. Others thought that requirements under existing consumer law are clear, stringent and require transparency and it was noted that providers can be penalised for misleading actions or omissions in relation to pricing. Updating of legislation to ensure the position regarding a levy is clear was suggested to be important as was clarity on whether the charge would be applied regardless of cancellation and on whether the levy should be added pre- or post-VAT.

Some respondents suggested that the requirement should be to record the levy as for VAT, while others emphasised the importance that it should be should be shown as separate from the room rate, making clear that it is not part of the accommodation price but a tax on the accommodation, and outwith the control of the provider. Inclusion of the levy in a total rental price was suggested to distort competitive pricing.

It was also argued that any requirement to display a visitor levy should be at the discretion of individual providers. This was suggested to be in line with current industry practice relating to accommodation prices and, while it was suggested that most businesses would be likely to highlight the tax, it was argued there should be a choice not to do as visitors might be deterred. There was a proposal that businesses required to charge a visitor levy should have the option to show the levy separately from other charges on customer bills.

An alternative view was that the approach must be consistent, with respondents suggesting both a standard or statutory format and that either all providers should display the levy, or none should do so. It was argued both that displaying the levy is normal practice in other European destinations and that it is not.

The importance of transparency was highlighted, and some respondents argued that the levy should be shown clearly at the time accommodation is booked.

Specific locations where it was suggested information concerning the levy should be displayed were:

• On websites including those of booking platforms. With respect to the latter it was argued there should be clarity with respect to whether the charge would be collected online or paid at the accommodation. However, it was also argued that providers should not be required to include the levy in advertised accommodation prices since commission is charged as a percentage of these rates, representing a cost to providers.
• At tourism offices or on tourist information websites and apps. A responsibility for the Scottish Government and local authorities to ensure visitors are aware of the levy was also suggested.
• On price lists or in terms and conditions.
• In advertising and marketing materials including printed leaflets. Potential costs to providers were highlighted if rates are changed after leaflets have been printed.
• On invoices or receipts. It was noted that inclusion on till receipts would be difficult as different areas may have different charges.
• At the premises, for example on a notice in the reception area.

In addition to providing transparency for visitors, making the levy more visible was suggested helpful to local authorities in publicising benefits from its collection. Providing links to further information on the purpose and priorities of a local levy was suggested. It was also argued that the Scottish Government should provide explanations of the visitor levy in multiple languages as it will be important the levy is clear for visitors whose first language is not English.

Timescales for introduction, transition and variation

The consultation paper explained that parliamentary timescales mean the power to impose a visitor levy is not likely to be available to local authorities until the summer season of 2021 at the earliest. Since accommodation may be reserved and paid for before or whilst a local authority is deciding whether to impose a visitor levy, an approach will needed that ensures accommodation providers do not have to meet a significant unforeseen tax liability, that local authority revenues are not compromised and that negative messaging for prospective visitors is avoided.

Question 30: What, if any, transition arrangements should apply when accommodation is reserved and paid for in advance of a local authority choosing to impose, or subsequently vary, a visitor levy for the period the accommodation is let?

Please provide a reason (or reasons) for your answer.

Some respondents argued that a levy should not be applied retrospectively to stays that have been booked and paid for in advance of a levying being introduced. However, the most frequent position was that a levy should not be applied to prices agreed or bookings made before the date on which a levy is introduced. These respondents either made no reference to advance payment, or specifically argued that the point at which a booking is made is the point of contract.

An alternative view was that a levy should be paid at the rate in force on the date of the stay, irrespective of whether accommodation has been booked or paid for in advance. It was noted that payment of a levy could be required on arrival or at departure from the accommodation.

Other respondents indicated that they thought that there should be no transitional arrangements but provided no further information explanation.

Charged according to date of payment

It was argued that application of a levy to the cost of accommodation that has been booked and paid for in advance would be in breach of consumer protection requirements.

However, it was also suggested that the tax could be levied on the balance payable if only a deposit had been taken prior to introduction of a levy.

Charged according to date of booking

It was suggested that any levy should be applied at the date of booking or the point of contract, or that it would not be possible for accommodation providers to impose fees that were not stated clearly to the consumer at the time of booking. Applying a levy to bookings already in place was also suggested to be too complicated or time consuming, or that such an action would be likely to encourage cancellations while, conversely, honouring the rate in place at the point of booking might encourage advance bookings. A risk that accommodation providers might be unable to recover the levy from customers and would be obliged to cover the cost themselves was highlighted.

The length of the period for which advance booking may be taken was also raised with an observation that tour operators may contract accommodation three years in advance, and that contracts for events such as weddings may be agreed more than a year in advance. However, it was also suggested that while bookings for named individuals should not be taxed retrospectively, block bookings should be included in a levy.

It was acknowledged that a policy of honouring the date of booking would create an additional burden for providers and would require keeping records to prove when a booking had been made in order to avoid levy charges.

Charged according to date of stay

Some respondents acknowledged that customers would need to be notified of a new visitor levy introduced after they had booked or paid for their accommodation, but it was also argued that visitors would understand that a government has a right to introduce a tax and a parallel was drawn to implementation of changes in VAT rates. Suggestions included that providers could add a statement about the introduction of a visitor levy and the possibility that a levy might be in place by the time of a stay.

Length and timing of notice periods

General points on a lead in time included that this should be set in a national framework and that a long period would reduce the need for transitional arrangements, increase transparency and avoid disputes around additional charges that come into effect after contractual arrangements are made. It was also observed that Question 19 suggests a timeframe for introduction of at least one financial year following conclusion of consultation and engagement activities and argued that, in this event no additional transitional arrangements should be required.

Varying notice periods were proposed, primarily for implementation of a new visitor levy but also for changes to the existing rate. Reasons given included primarily that the time proposed would allow advance bookings to be honoured before a levy is introduced, but also that it would give enough time:

• For providers to set up appropriate systems, or to update promotional materials and ensure potential guests are given accurate information.
• For councils to set up a regulatory framework or to provide training and support to providers.
• For a public information campaign to raise visitor awareness of the levy. Production of an official Scottish Government notice that providers could send to their visitors was also suggested.

Specific suggestions included periods of:

• 6 months.
• One year or at least a year. Less than one year was argued likely to give risk to costs that cannot be passed on to visitors and so to be a tax on operators.
• 18 months.
• 18-24 months. This was noted to be in line with best practice recommended by the European Tourism Association.
• Two years or at least two years.
• Longer than two years.

Respondents also commented on the potential timing of changes to a levy, including that announcement of changes should ideally be made towards the end of a tourism season or that changes should not be implemented during peak season. The 1^st of April was suggested as a suitable date at which to implement a new rate, since this would be in line with the tax year. It was also suggested that a local authority should meet costs if rates are changed after marketing material for the forthcoming season has been produced.

Other points raised

Specific legislation cited as relevant to the question of transition arrangements were:

• The Consumer Rights Act 2015.
• The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.

Two Professional body respondents suggested that the model used for implementation and changes to Land and Buildings Transaction Tax could be applicable to introduction of a visitor levy. This would involve a two-part test for the levy to apply:

(i) The date of the stay would have to be on or after the date of introduction of the visitor levy; and

(ii) The accommodation must have been booked and paid for on or after a transitional date.

A period of one year between the transitional date and the date of introduction of the levy was suggested to be appropriate.

It was also noted that bookings may have been fully paid in advance, a deposit may have been paid, or a reservation with no deposit may have been made, and that consideration will be required as to the approach to be taken in each case.

Question 31: Should these transition arrangements be set out in a national framework or be decided by local authorities?

Please provide a reason (or reasons) for your answer.

Responses to Question 31 by respondent type are set out in Table 19 below.

A substantial majority of respondents, 79% of those answering the question, thought that any transition arrangements should be set out in a national framework. Organisations were more likely to be of this view than individuals (87% and 72% respectively). Local authority respondents were evenly divided on this issue.

Table 19

Question 31: Should these transition arrangements be set out in a national framework or be decided by local authorities?
Respondent type	Set out in a national framework		Decided by local authorities		Don't know		Not answered	Total
	N	%	N	%	N	%	N	N
Individuals	145	72%	32	16%	24	12%	74	275
Accommodation provider (hotel)	47						2	49
Accommodation provider (other)	53				4		10	67
Business organisation	4						3	7
Community council or residents' association	2		2				1	5
Heritage or culture organisation	5		2				5	12
Local authority	8		8		2		4	22
Other	1						4	5
Other representative organisation	2		1				2	5
Other tourism or hospitality business or organisation	5				2			7
Port authority	1						2	3
Professional body	7						3	10
Public body							6	6
Tourism and hospitality industry representative organisation	9						1	10
Tourism development or promotion organisation	8						3	11
Trades union, political party or campaign organisation			1		1		3	5
Total organisations	152	87%	14	8%	9	5%	49	224
All respondents	297	79%	46	12%	33	9%	123	499

Further comments tended to be brief and reflect similar themes to those raised at other questions considering whether there should be a national framework or whether decisions should rest with local authorities (for example, Questions 6, 7 and 9).

Additional points made at Question 31 by those favouring the approach being set out in national framework included:

• Transition arrangements should be enshrined in the enabling legislation.
• Good communication of expectations is needed to ensure businesses can comply easily and get it right. This would be better handled nationally. A national framework would be more likely to attract national attention and receive publicity.
• The marketing of destinations is now centralised to VisitScotland and it will be important that they be involved in decisions.
• There will need to be a lot of work to support the accounting systems for small businesses and a national scheme is the only way this could work.

Additional points made by those favouring transitional arrangements being decided by local authorities included:

• It would be most appropriate for local authority partners to collaborate and develop methods of best practice aligned to local circumstances.
• For an island perspective, this would allow the visitor levy scheme to be tailored to market circumstances and local requirements in accordance with the principles of the Islands (Scotland) Act 2018.

Impact Assessments

The consultation paper explains that a number of impact assessments must be considered in order to understand the ways new legislation might impact on a wide range of stakeholder groups across Scotland.

The partial BRIA indicates that the main groups that will be affected by a visitor levy are:

• Visitors (both domestic and international).
• Tourism accommodation providers and their employees.
• Other tourism businesses and wider economy.
• Local residents and general public.
• Local Authorities.

Notable impacts on these groups which were identified include:

• Visitor behaviour (spend less, stay less time, go elsewhere).
• Business behaviour (reaction to levy and reaction to change in visitor behaviour).
• Reduced visitor spend and knock on economic impacts more widely.
• Improved environment for local community.
• Improved perceptions of tourism held by public.
• Increase in revenue available for investment by local authorities.
• Reputation of Scotland as a welcoming place.

Question 32: In addition to what is set out in our draft BRIA are you aware of any additional impacts the visitor levy will have for any of these groups?

Please specify group and additional impact.

Comments at Question 32 tended to be brief, and often echoed the main groups and types of impact on these groups set out above. The analysis below presents additional issues raised^[13]. These included the suggestion that the partial BRIA is comprehensive for the groups listed but that, as acknowledged, there is a requirement to better develop the costs and benefits of implementation for local authorities. It was also suggested that the environmental impact of a visitor levy should be taken into account.

Other comments often focused on the administrative implications of a visitor levy for accommodation providers or any other businesses required to collect a levy. It was also suggested that increased prices could mean a reduction in bookings.

In terms of specific types of businesses and how they might be affected, suggestions included:

• A levy applying to motorhomes may mean fewer sites provide a touring service, which in turn could increase the number of wild campers.
• Charities providing accommodation – for example campsites operated by charities with all profit going to the charitable body.
• Businesses other than accommodation providers, such as pubs, for which an additional tax will have a knock-on impact and which will be likely to see a reduction in spend from visitors.
• Banks, and other facilities used by visitors.
• Businesses located in southern Scotland, and which are more likely to be affected by visitors choosing to stay and spend in Northumberland or Cumbria.

There were suggestions that the introduction of a visitor levy would have a particularly negative impact on:

• Campers, as they have already invested heavily in their camping units and equipment and will effectively be paying more for accommodation that they already own.
• Rural communities, for which local businesses, such as a hotel, can effectively act as a community hub that could be lost if a downturn in accommodation-driven revenue puts the business at risk.

Finally, there were specific comments about two of the options as set out in the partial BRIA. With reference to Option 0 (business as usual), it was suggested that the pressures on provision of funding in some local authorities was not fully articulated. It was reported that current public finance constraints mean some tourism facilities may not get the investment they require, and it was suggested that the impacts of failure to invest need to be measured alongside any impacts that might be seen were a levy to be introduced.

With reference to Option 1 (local authorities have a power to implement a visitor levy with the parameters set out in a national framework) it was thought that the impact on the potential economic cost from reduced profitability and competitiveness resulting from a change in visitor behaviour requires context. Specifically, it was suggested that the assessment of the impact on businesses significantly oversimplifies the whole impact and neglects other important factors such as a destination's overall appeal.

Question 33: Are there any other groups not listed here that should be given attention in the impact assessments?

Please list and state how they will be affected.

Comments tended to be brief but included that positive impacts should be noted, including those for local residents and local authorities.

Types of people

Other comments often referred to some of the groups that were listed as possibly being exempt from paying any visitor levy and as covered at Question 10-12 above. Suggestions included that the impact assessments should consider:

• All business travellers, both domestic and international, and including travel by those who may be considering investing in Scotland.
• Those travelling on behalf of public agencies and public authorities and emergency services, specifically the NHS.
• Trades people working in remote rural areas who often need to book accommodation to carry out work. It was suggested that if the levy is applied to businesses needing accommodation as part of works it will have a knock-on effect to the final cost of works to locals using these services.
• Seasonal workers who are given accommodation as part of their job.
• Families that have members away from home and need to visit, such as those in custody, those in special schools or medical facilities away from home.
• Gypsy travellers.
• Private peer to peer hosts.

Types of businesses or organisations

Other comments identified types of business or services that respondents thought should be covered by impact assessments. These included:

• Online accommodation platforms, such as Airbnb, Expedia, and Booking.com.
• City Convention Bureaus or agents working in tourism.
• Transport providers, including bus tour operators, both to and within an affected area.
• Port Authorities or marinas.
• Ferry service providers, including CalMac. Specifically, transport providers, shipping agents or cruise lines if potentially involved in collecting a levy.
• Airports.
• Events or organisations, including some conservation and heritage groups, local tourism associations or DMOs, or trade bodies that rely on visitor income or sponsorship by businesses.

It was also suggested that workers across the industry, including those in retail and hospitality will be affected. It was suggested that this is the group that will be required to deliver a service worthy of the additional costs and unless they too feel valued, this may be a challenging task to fulfil.

Islands and their communities

At both Questions 32 and 33 there were suggestions that the impact of a visitor levy on island communities needs to be given particular consideration including that, under the Islands (Scotland) Act 2018, an Islands Impact Assessment should be carried out.