Visitor Levy (Scotland) Bill: island communities impact assessment

Step one – Develop a clear understanding of your objectives

What are the objectives of the policy, strategy or service?

As part of the agreement of the 2019-20 Draft Budget, the Scottish Government committed to consult on the principles of a visitor levy (VL) and introduce legislation to permit local authorities to introduce such a levy if they consider it appropriate. This commitment was part of a package of measures focusing on local tax reforms and local fiscal empowerment. A public consultation was held from September to December 2019, with a consultation analysis report published in March 2020. Work was then paused during the pandemic, until the 2022/23 Scottish budget committed the Scottish Government to resuming work on the Visitor Levy proposal. This culminated in the announcement that a Visitor Levy Bill would be part of the 2022-23 Programme for Government^[1].

The Bill will give local authorities discretionary power to apply a levy on persons staying overnight in commercially let accommodation. It will be for individual local authorities to decide whether or not to apply a VL for their areas, whether that would apply in all or part of the region, and at what rate it would be set.

We are committed to an ambitious New Deal for local government, including to develop and agree on a fiscal framework for local government. The Bill’s discretionary power for local authorities to introduce a VL is an important part of this work. This is a long term ask from local government and will provide Councils with a discretionary power they can use if they believe it to be appropriate, after consultation with relevant communities and businesses.

We also share an ambitious vision with the tourism industry (set out in Scotland Outlook 2030, Scotland’s national tourism strategy) for Scotland to be the world leader in tourism by 2030. Giving local councils the power to introduce a levy is one tool that can provide the additional resources to meet that vision.

Do you need to consult?

Yes, engagement events were carried out in 2018 as part of a national conversation on the principles of a tourist tax, and a formal public consultation was carried out in 2019 with on-going stakeholder engagement since then.

How are islands identified for the purpose of the policy, strategy or service?

The islands have not been specifically identified for the policy as the Bill provides a discretionary powers for local authorities to use, if they wish to do so. It is not a national scheme. The provisions in the Bill will not differentially affect those who live on the islands compared to those who live on the mainland, as the Bill provides local authorities with a discretionary power to use if they so wish to. Local authorities will have to consider the impact of any VL scheme on island communities in their area and beyond.

What are the intended impacts/outcomes and how do these potentially differ in the islands?

The Bill supports the advancement of a number of Scotland’s existing policies^[2]. The Bill’s core aims are:

• To provide local authorities with a discretionary power to introduce a local visitor levy on overnight accommodation in all or part of their area, should they wish to do so
• To provide a broad national framework for the establishment of local visitor levies by local authorities, including the basis of the charge, extent, and enforcement

The Bill will contribute to the following of Scotland’s National Outcomes:

• Communities: we live in communities that are inclusive, empowered, resilient and safe
• Economy: we have a globally competitive, entrepreneurial, inclusive and sustainable economy;
• Environment: we value, enjoy, protect and enhance our environment
• Fair Work and Business: we have thriving and innovative businesses, with quality jobs and fair work for everyone

As a discretionary power for local authorities to use if they wish, the Bill’s impacts and outcomes on island communities will depend on decisions made at local authority level on the design and implementation of a VL scheme. In choosing to enact a VL scheme in their area, a local authority will be subject to existing statutory requirements, including those required under the Islands (Scotland) Act 2018.

Is the policy, strategy or service new?

Yes - this is a new policy.