Edinburgh’s tourist tax is scrapped after 10 years of wrangling

• Tourist tax for Edinburgh visitors scrapped ten years after initial proposal

• Levy had been suggested as council looked to spend less on festivals and events

The city council planned to reduce its spending on festivals, events and promotional initiatives by setting up a “transient visitor levy”, aimed at raising more than £3 million a year.

But forcing businesses to add an extra charge on to their bills has been abandoned following huge opposition from business leaders and the repeated rejection of the plans by successive Holyrood governments.

The new Labour-SNP council administration had revived the idea after the election, insisting the charges could help ease the burden on the taxpayer of paying for the city’s festivals, as well as better promote the city’s attractions and events.

The local authority claims it forks out more than £11m in tourism promotion and infrastructure – with a return for the city of around £609m.

The council has now admitted that already high levels of taxation on the UK hotel industry, growing international competition for Edinburgh and the impact of the economic downturn were key factors in dropping the idea.

The dumping of the idea is an embarrassment just months after the council vowed to go to the Scottish Government with fresh proposals after previous schemes were thrown out.

Now the city is to pursue some kind of voluntary scheme aimed at generating extra money for marketing projects, although the money raised is expected to be fraction of the income that would have come from a tourist tax initiative.

The income is likely to be ringfenced for Marketing  Edinburgh, into which the council put £1.2 million to get it off the ground. However, privatesector firms are already being asked to put money into the body, which is due to unveil a new image for the capital later this year.

Council leader Andrew Burns said: “It was obvious that there was a lack of government support for a transient visitor levy, which was also opposed by the hotel sector in the city.

“But we think there is a fair degree of support in the industry for some form of voluntary arrangement. The legislation is in place for business improvement districts and that is one of the options we will look at now.”

However, Colin Paton, chairman of the Edinburgh Hotels Association, said: “I’d go as far as saying there is a degree of interest in some kind of voluntary scheme, but the council needs to build up trust with the industry. It is certainly not there at the moment.”

Marketing Edinburgh, said 170 firms and organisations were contributing voluntarily.