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Council / SIC leader unsure whether visitor levy would bring real financial benefit

SHETLAND Islands Council leader Emma Macdonald says she is “not convinced” the income the local authority could receive through a ‘tourist tax’ would be worth it once administrative costs are taken into account.

She made the comment at a meeting of the council’s development committee on Wednesday, where members signed off the local authority’s response to a Scottish Government consultation on the proposal.

The visitor levy, which – if passed as legislation – would give councils in Scotland an extra way of raising money, but local authorities would have a choice in whether to impose it, and if they do, what the charge would be.

It could see a small additional fee applied on accommodation for visitors, reflecting what happens in a number of cities in Europe. The income would then be passed onto councils to spend on local tourism facilities and services.

But there was a mixed response in the council chamber when it came to how it could all pan out in Shetland, especially on the extra administration it could cause for local accommodation providers.

Shetland Central member Davie Sandison said it was a “one size fits all” approach which he felt would not benefit local businesses.

“I would be wholly opposed to this at all levels in terms of the impact has on the actual people involved in businesses in Shetland, whether they’re small or large, in providing the tourist experience that we’re all happy to support,” he said.

Sandison added that there would also be administrative burdens on the council when it came to spending the income.

And Macdonald said that once the cost of administrating the scheme is taken into account, the council may only receive a small amount of income.

SIC political leader Emma Macdonald. Photo: Shetland News

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“By the time you add in all the administrative costs, I don’t think we’d be left with very much money realistically that would actually make enough difference to make this a benefit,” she said.

Whilst Macdonald welcomed local authorities being given a possible new income stream, the council leader suggested it would not help the local authority in its financial challenges.

She also expressed concern that it could mean something else is taken away by the government.

Meanwhile committee chairman Dennis Leask questioned that if the council decided against imposing the levy, then the government would in future be hesitant to offer other tourism-related funding.

But Shetland West member Liz Peterson said the scheme could represent a good opportunity to support improvements which would benefit both visitors and locals – using examples such as increased public toilet availability or road upgrades for buses.

“I don’t think we’re going to find money for the kind of things like that from anywhere else,” she said.

A key feature of the council’s formal response to the government consultation is that small accommodation businesses stand to be negatively impacted.

“The majority of providers are microbusinesses (including volunteer-run social enterprises in the case of many campsites, caravan parks and marinas) and regulation is often cited as one of the factors which make trading conditions difficult for small enterprises,” it said.

“The sector has faced considerable difficulties arising from the Covid-19 pandemic, and an increase in legislation including the introduction of the Short Term Let Licensing provisions.

“There is a risk that the addition of further legislation will increase the burden on accommodation providers and lead some to leave the sector, which will impact on the ability to increase economic impacts from the visitor economy and reduce the diversity of provision in the area.”

The response added that this will have a “disproportionate impact on rural and island areas where the sector is largely comprised of smaller providers and where there is generally a lack of alternative provision”.

However, the response also said that it is “appropriate that local authorities in Scotland should have this power given the scope and scale of the Scottish visitor economy, recognising the discretion local authorities will have whether to implement or not”.

Visitor spend in Shetland grew from £23 million in 2017 to £36 million in 2019, with a new survey expected to be carried out next year.

The Scottish Government says the levy would be a percentage of the overnight accommodation cost with the rate set by the local council.

Councils would be able to apply a visitor levy in all or parts of their area.

The levy would be collected by the accommodation providers and passed onto to the relevant local authority on a regular basis, such as quarterly.

It would apply to almost all types of overnight accommodation within the area where a visitor levy is being applied, including hotels, self-catering and campsites.

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