Edinburgh to vote on introducing 5% 'tourist tax'

Councillors in Edinburgh are to vote later on the introduction of a tourist tax aimed at raising up to £50m a year.

The city could become the first in Scotland to charge a 5% visitor levy on stays, with the profits used to fund improvements to the capital.

The charge, which mimics those already in place in major European destinations, would cover hotels, B&Bs, self-catering accommodation and rooms and properties let through websites such as AirBnB.

However, opponents say it will deter visitors to the city and risks harming Edinburgh’s appeal as a tourist destination.

Proposals for the tax will be voted on at a meeting of the city council’s policy and sustainability committee.

If passed, the levy could be brought in in time for the festival season in 2026 and will bring Edinburgh in line with cities such as Amsterdam, Berlin and Lisbon.

Funds generated from the tax would be used for the improvement of public spaces.

Council leader Cammy Day said £5m of that would also be devoted to housing, with 35% going back into the arts sector.

He said the charge would be “a huge benefit” to the city, adding he doubted the size of the charge would turn any potential visitors away.

Mr Day told BBC Radio's Good Morning Scotland: “It’s equivalent of a few pounds worth of a cup of coffee. The evidence that we’ve done and research from across the world shows a levy has no impact on tourism.

“People don’t come here to see the insides of hotel rooms, people come here to see the world heritage centre, the castle, the palace, the hills, the sea around the city, the amazing capital that we are.

“I can’t see a few pounds putting somebody off visiting the city. If you can afford to spend hundreds of pounds on a hotel room, you can afford a few pounds to support the city that you are visiting.”

Edinburgh introduced new regulations for AirBnB-style properties in October last year in an attempt to curb the expansion of short-term letting accommodation.

Hosts must licence their homes if renting them as a short-term let, or face a fine of up to £2,500.

The city council declared a housing emergency in November 2023 due to skyrocketing house prices and rental rates, coupled with a record number of people identifying as homeless.

Tourists contribute an estimated 5.3 million overnight stays to Edinburgh every year.

But already expensive room rates soar in price during the August festival season and concert-goers visiting Murrayfield for Taylor Swift’s trio of sold out shows earlier this year reported surging prices for single-night stays.

Leon Thompson, executive director of UK Hospitality Scotland, said an additional charge on top of that rate would be passed on to tourists.

He also said the increased administrative and implementation costs for businesses would be a further blow to those in the sector.

“Tourist taxes are not good for this country,” he said.

“We are already not a very competitive destination.

“We have the highest rate of VAT on hospitality in Europe and we also have outdated business rates which all add to the costs for businesses and obviously those costs are which go on to the visitor experience.”

Proposals for a tourist tax in Edinburgh were initially put forward in 2019.

However, legislation giving local authorities the power to apply the levy was not published until May 2023.

If plans are approved, they will be put out for a 12-week public consultation.

A final decision would then be taken in January 2025, with the scheme fully implemented by July 2026.

Manchester introduced a £1 per room, per night fee last year aimed at paying for measures to attract more tourists.

It was estimated to have raised about £2.8m in its first year.

John Lennon, director of the Moffat Centre for travel and tourism business development at Glasgow Caledonian University, said surcharges were not necessarily a barrier to tourists visiting major cities.

“Visitor levies are not new, you see them in cities from New York to Amsterdam, to Manchester.

“In New York, for example, the levy is 15%, so Edinburgh in comparison at 5% looks quite small.

“Those cities have not seen diminution of visitors due to the size of the levy. When we are seeing equivalents elsewhere, it is going to be marginal in terms of price disruption.”