Capital businesses asked to keep festival fires burning

Published on 18/02/2011 16:20

MOST firms in Edinburgh would be forced to pay towards events such as the festivals and the cost of promoting the city under a radical new "city growth tax" proposed by city leaders. The smallest traders would be exempt.

Under the scheme currently being discussed by city leaders and businesses, every firm that has a rateable value above 50,000 would have to pay an additional levy, likely to be an extra one per cent, on top of business rates.

It would effectively be an Edinburgh-wide extension to the controversial Business Improvement District, which sees firms pay towards improving the city centre.

It is expected that millions of pounds would be generated by the new scheme every year, which would then be invested in promotional work by the new Marketing Edinburgh body, as well as helping to fund events and festivals.

The scheme is designed as an alternative to the idea of a compulsory "bed tax", where an extra charge is added to hotel rooms, which has been opposed by hoteliers.

The proposals would mean that every firm would have to contribute, not just those that directly benefit from tourism and leisure spending.

Councillor Tom Buchanan, the city's economic development leader, said: "We are in discussions about this with various elements of the hospitality sector and the wider business community.

"We have different mechanisms in terms of who would be involved. The hospitality industry say that, directly or indirectly, all of Edinburgh's business community benefits from business or leisure tourism because it brings additional revenue to the city, so it was felt the costs should be spread as widely as possible. If we don't get voluntary agreement on this, we will have to return to looking at a bed tax, but all sides recognise that if we want world-class events, we need a pot of money to do that."

He said that it was difficult to assess how much money the "city-wide business improvement district (BID)" would bring in. Cllr Buchanan said: "It would be a seriously significant sum of money because public sector finance will continue to decline and if we want to keep this as a world-class city then we have to raise money from somewhere else."

Hospitality sector leaders say that the proposal would be preferable to a bed tax. Calum Ross, chairman of the British Hospitality Association's Scotland committee, said: "Tourism is everyone's business, so it is important that hoteliers are not targeted for tax rises.

"In the case of Edinburgh, the hospitality sector is working with the city council to develop a city-wide BID."

Essential Edinburgh, which runs the existing city centre BID, has faced criticism in its first three years, but it still intends to hold a ballot at the end of its five-year term to see if businesses will support it being extended.

It means that a decision would have to be taken on whether some companies would have to pay two levies.

Denzil Skinner, who was appointed Essential Edinburgh's chairman earlier this month, said: "It has not been easy, there are lessons to be learned and we will apply them moving forward."