The city council wants to lobby the Scottish Government for permission to introduce a Transient Visitor Levy (TVL) or tourism tax. The council believes requiring an extra £1 charge for tourists staying in the Scottish capital’s hotels could generate around £11m a year.
The council would want to use the additional money to increase funding to areas where tourism puts pressure on the city’s infrastructure.
The council agreed to push ahead with further engagement with visitors, residents and businesses – as well as holding round-table discussions before plans for a formal consultation are put in place.
The Conservatives hit out at the SNP-Labour coalition’s plans, with Cllr Graham Hutchison labelling the proposals a “prolonged and embarrassing charade”. The Tories also pointed out while other European cities have a tourist tax, VAT for hotel bookings is charged at a lower rate in those countries.
Fellow Conservative Cllr John McLellan raised concerns there was no guarantee the money raised in Edinburgh would be spent in the city, with uncertainty around the Scottish Government’s role in administrating the charge.
Leader of the Tory group, Cllr Ian Whyte, added: “It’s a dog’s breakfast of a policy and it should be ditched at this point.”
But the administration gained the support of Liberal Democrat and Green councillors in taking the initial proposals to the next stage.
Council leader Cllr Adam McVey said the charge would “help to fund the things we pay for to make Edinburgh such a vibrant city”.
He said: “It would be an understatement to say this has been a long time coming. This goes to the heart of the kind of city we want to be.
“It’s a clear statement that we want our city to remain strong and vibrant. This is an acknowledgement that the industry itself should make a commitment to that success.
“This is a professionally thought-out way of addressing what this city needs. This is not a tax on businesses, it’s a tax on the tourists.”
Lib Dem Cllr Neil Ross suggested the council should look at introducing the charge to other visitors in the capital, including those staying at Airbnb properties and even camp sites.
Green councillors, who also backed the proposals, called for the plan to move forward as quickly as possible.
Cllr Steve Burgess said: “The city is finally getting serious about introducing a TVL.
“It’s to be regretted though, that if the council had supported it when it was originally suggested seven years ago, the council would have raised £100m of investment. Let’s not let another seven years and £100m pass us by.”
The Federation of Small Businesses (FSB), which is against the introduction of a tourist tax, has asked for more engagement between the industry and the council.
Garry Clark, FSB development manager for the east fo Scotland, said: “The council’s report raises more questions than it answers and it is concerning that the report explicitly recommends that the council should press ahead with plans for the tax irrespective of what businesses, residents and tourists actually say during the consultation.
“Give Edinburgh businesses a real say on an issue that will affect them, their customers and the wider local economy.”