Edinburgh tries again

By | Category: Travel rumblings

Edinburgh Castle: The city considered an accommodation tax in 2011

Councillors in Edinburgh last January decided that they would look again at introducing an accommodation tax. At the time the Edinburgh Evening News suggested that the plans would be introduced in weeks.

Four months later and those plans have still not materialised.

Why?

One reason could be that the council – as it should have known from its previous attempt years ago – has no powers to introduce any such tax. In January did the council think that they had persuaded the Scottish government to change the law allowing the council to introduce a tax? If they had, then the delay in announcing it suggests that either the Scottish government has changed its mind or that the council was deluding itself in thinking it would be able to get what it wanted.

Indeed, if the Scottish government was in favour it would sit oddly with its view of ending airport departure taxes. It sees that tax as restraining growth and the same would happen if a bed tax was introduced. Or so claim bodies ranging as widely as the Federation of Small Businesses (FSB), the Scottish Tourism Alliance and the Association of Scotland’s Self-Caterers. The FSB polled businesses in Edinburgh in the last couple of weeks and about three-quarters thought it would be detrimental to business growth if there were such a tax.

You could argue that the same was said about Airport Passenger Tax yet billions are raised from the tax and traveller numbers going abroad remain high so travellers seem not to be too concerned. That tax is much higher than any proposed as an accommodation tax so won’t visitors just grin and bear it? Won’t some hoteliers just absorb the tax – if they can economically do so – in order to keep customers checking in?

tourist buses

Will a tax reduce the number of people taking a tour around the city?

For the councillors, an accommodation tax represents another potential source of revenue and one which won’t really hit local electors – a major if unspoken source of concern to politicians. The businesses that object don’t have the voting power that electors have. Given the choice between a cutback on social housing or repairing potholes, for instance, and hitting visitors for a pound a night to stay in a hotel, voters will opt for the tax. If it fails to come off, politicians can say they tried but their hands were tied by Holyrood!

We don’t know if the politicians are serious or not about wanting a bed tax or are just grandstanding and I doubt whether we ever will. They will deny that they are not serious and the blame for introducing or not introducing it can be pushed upwards to Holyrood who can blame Westminster who can blame Brussels and they can blame whoever they like. That’s the way the game works.

My view is clear and I have stated it before. I think they are unjust because they tax only those who stay overnight. If you want a tourist tax (which is what this plan by Edinburgh is) then surely it should be fair.

If a tax does get implemented is it spent on improving things for the visitor or does the money just end up in a general fund for spending on the whim of the council? Many overseas destinations say that it is spent on improving the lot of tourists but this can include, rubbish collection, cleaning the streets, provision of toilet facilities (usually with payment to use them) and parks maintenance. You could argue that this improves things for the tourist but shouldn’t this be done anyway as part of a locally elected responsible body?

The Catalonia region of Spain has gathered over €200 million from their bedroom taxes in the last six years so it is easy to see why politicians are interested. It also hasn’t stopped tourist numbers from rising there but then all tourist visitor numbers have been rising. Would they have seen greater revenue just from tourist spending more without having a bedroom tax? The answer is unlikely. Most people have just shrugged their shoulders and paid.

What we do know is that if there is a tax its we, the holidaymaker, that will pay

or even deter people from travelling into Edinburgh at all?

But what of us? What would our attitudes be if there was such a tax? In Germany, over twenty cities have taxes that range from a euro to 5% of the cost of staying at the hotel. In Niagara Falls, some hotels are charging 10% of the entire hotel bill as a tax dressed up in a variety of different ways like tourism improvements or tourism levies. It amounts to the same thing.

We may be used to paying it places like New York, Venice, Rome and Barcelona but would they pay it here? I am unaware of any local polling done since the council leader, Adam McVey, announced the idea and he probably thought it unnecessary to enquire other than maybe considering using a consultant to show how much money Edinburgh might any from any such tax.

From abroad there is evidence about visitor attitudes and the impact accommodation taxes have.

Visitors to Venice often stay on the mainland in Mestre and commute across the bridge using the inexpensive bus service but that could also be due to the high cost of hotels along the Grand cananl and in the main tourist areas. It is certainly cheaper tuekd in the lanes behind the Guidecca. People visiting Rome stay outside to avoid the tax as well and in New York why stay on Manhattan in a small cramped room – or an expensive one, when cheaper, more spacious rooms are in the other boroughs?

What probably irks people more than  paying an accommodation tax is having a bill presented to them than is far more than the price they think they have paid. In the USA and Dubai, for example, there is a base rate of say $100 you pay then here is the local tax, the tourism improvement tax, the tax on your inside leg measurement or whatever and you end up paying $130! What most of us would prefer is that the price we were quoted ( as is done with airline prices) is that the price we see is the price we pay.

the council didn’t cover itself with glory over installing trams. How would it manage an accommodation tax?

Some people won’t object to paying an accommodation tax provided that it I used for tourism improvements. Business tourists won’t care because their companies will be coughing up the cash.

If a tax were to be introduced a proportion of visitors who would normally stay five to seven days would reconsider and possible stay further away which would help towns nearby. On a weekend trip, the tax may have no noticeable effect at all when compared to what might be spent on an attraction or a meal out. Others would cut down the number of days they would stay and some might even limit their visit to a day trip.

As has happened throughout the ages, taxation is a manipulative device of politicians to regulate what people do. Charge too much and they resist. Getting the tax rate at precisely the optimum level is hard to do and, once implemented, any changes that subsequently have to be made do not immediately remedy an incorrect decision.

If Edinburgh does get the ability to introduce a tax it should tread warily.

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