Bill Jamieson: Record year makes strongest case yet for taxing tourists

Scotland should now be enjoying its best tourist season ever. Airlines are scheduling more flights in and out of our airports. There is continuing expansion of hotels and holiday accommodation. We have a growing reputation as a 'must visit' country around the world. Our capital city now hosts festivals throughout the year.

Overseas visitors should create an all-time peak for international tourism spend this year. Picture: Steven Scott Taylor

And now – gasp as you read it –there is a Brexit Benefit with the lower pound making Scotland a more competitive holiday destination for overseas visitors.

Overseas tourist numbers should smash records this year – and, better still, create an all-time peak for international tourism spend. The latest numbers for the first three months of the year show overseas visitor spend in Scotland up 13 per cent to £190 million.

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Among positive news items this year, Delta Airlines has launched its new non-stop service from Glasgow to New York JFK, offering greater travel choice between Scotland and the US.

Scotland has been named the number two country to visit in 2017 by travel book company Rough Guides. It highlights the wildlife, whisky and “wonderfully warm welcome” visitors receive in Scotland.

And the annual number of tourists visiting Diageo’s 12 distillery visitor centres in Scotland has passed the 400,000 mark for the first time. In the year to July, 409,908 people visited the sites – up seven per cent on the previous year. The figures have followed a consistent upward trajectory in the past ten years, with Diageo’s distilleries now attracting more than double the number of people eight years ago. All this, and Edinburgh set for a record-smashing festival. What’s not to like?

Tourism is a great positive for Scotland. Overall annual visitor spend is reckoned to be £4.8 billion. The industry accounts for some five per cent of our GDP and supports more than 190,000 jobs.

But there’s a cost, in infrastructure, environmental protection, transport provision, public building maintenance and street cleaning – and in the constant need to renew, adapt and innovate to maintain our competitive appeal.

None of this comes cheap. The capital city faces a continuing struggle to keep its museums, theatres and concert halls up to scratch, maintain its thoroughfares and keep the streets and pavements clean and tidy amid a phenomenal influx of visitors throughout the summer season.

All this has to be paid for when pressure on central and local government budgets is already intense and cutbacks are being made. Meanwhile, the Fraser of Allander Institute and the EY Scottish Item Club have warned of slow overall growth ahead for the foreseeable future.

We pride ourselves on ensuring that our main educational, civic and cultural attractions remain free: the National Museum of Scotland, Scottish National Gallery, Scottish National Portrait Gallery, Scottish National Gallery of Modern Art and the Royal Botanic Garden foremost among them.

The idea of re-imposing charges would be fiercely resisted. As for continuing to lump these rising costs on general taxation, the Scottish Government is already imposing the highest tax burden in the UK. As matters stand, the UK and Scottish governments are each investing £300 million in the City Deal boost for Edinburgh and southeast Scotland unveiled last week. From where else does this money come, other than from taxation? There is a limit to how much further the general tax burden can be raised without risking a backlash.

For more than a decade Scotland has argued the pros and cons of a tourist tax – a small levy per hotel stay night. With visitors to Edinburgh accounting for some nine million hotel nights, a modest tax of 2.5 per cent could raise up to £15 million annually.

So far, the suggestion has failed to win over the Scottish Government, is opposed by VisitScotland and has, predictably, brought down the ire of lobby groups such as the British Hospitality Association.

The arguments against include fears that higher taxes would reduce tourism levels; that many tourists would be charged for facilities they don’t use; that the burden and cost of collection would fall on businesses; and the risk that revenues generated would not be directed to tourism purposes.

But the tide of opinion could now be turning. The fall in sterling – with the pound down some 12 per cent against the dollar since last June and also down against the euro – has made us a more competitive destination and weakened concerns that a levy would deter visitors on cost grounds.

Political opposition may be weakening, both at council and Holyrood level. And a significant pointer to the growing support for a tourism tax came with an outstanding article in The Scotsman last week by former SNP justice minister Kenny MacAskill.

Other European cities he points out, have benefitted from a tourist tax, and the range of visitors to Scotland’s capital has increased from the UK, US and North America to “include a huge influx from Asia who come at all times of the year… The number of Chinese visitors in a rain-sodden Royal Mile or Holyrood Park in November or February can be staggering.”

Tourist taxes are applied in many areas around the world that neither deter Scots visitors from going nor harm the destinations they’re visiting.

And it’s not just urban Scotland but throughout the country that tourism has risen. Visitor numbers to the Highlands are growing. But there is a cost, not only to the maintenance of pristine areas but in the provision of suitable infrastructure and requirements.

“Grants from government and contributions from the private sector do not come close to offsetting that cost. Much falls upon the hard-pressed local authority and in turn the equally struggling council taxpayer.”

His intervention is indicative of a more sympathetic response across the SNP, given “not just the desirability but necessity of the income that could be generated”.

Any move towards a tourism tax would have to be at the discretion of local councils – Edinburgh may be groaning with a tourist invasion in August while my local area of Loch Earn in the northern Trossachs could benefit from many more.

And councils would need to ensure that the money raised is not just lost in council coffers but is spent on town and city enhancement.