THERE was a mixed response to news that the Scottish Government were to roll out legislation allowing councils to introduce their own levy on visitors staying overnight.

Yesterday, Finance Secretary Derek Mackay announced the policy as part of SNP’s Budget agreement with the Greens.

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He told MSPs: “The Scottish Government will now undertake a formal consultation on the principles of a locally determined visitor levy, before introducing legislation that will permit local authorities to adopt the policy.”

Andrew McRae, policy chair at the Federation of Small Businesses in Scotland, said the announcement was a surprise, as the government had assured firms that it would not happen.

He said: “The Scottish Government’s draft Budget was a spending programme that most firms could welcome.

“But we’ve seen concessions from the Cabinet Secretary for Finance that will erode the small business community’s trust in his administration.

“Instead of Brexit help for firms, we see more tax changes, including a levy on our vital tourism industry.

“Ministers repeatedly promised firms that they would not pave the way for tourism taxes without industry support. They’re breaking that promise today.”

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The SNP leader of the City of Edinburgh Council, Adam McVey, who hopes to introduce a £2 per room, per night, tourist tax, said he was delighted with the news.

“I’ll keep speaking to industry to make sure we get this policy right,” he promised.

The council has recently finalised plans for the levy, which would be the UK’s first.

Councillors will vote on the proposals next month.

Edinburgh’s charge would apply to Airbnb-like short lets, but would not be charged to people camping. It would also be capped at a maximum of £14 per room.

More than 2500 residents and businesses responded to a recent city council survey on the tourist tax, with the results suggesting 90% of residents are supportive.

The Scottish Tourism Alliance described the move as “beyond disappointing”.

“Whilst we acknowledge the Scottish Government’s commitment to conducting a formal consultation, we sincerely hope that there will be further economic analysis and detailed transparent examination of options to assess the impact a tourism tax will have on Scotland’s economy, before any implementation of a transient visitor levy be permitted to come into force.

“We look forward to early discussions with cabinet secretaries and ministers to establish what conciliatory measures might be adopted following the announcement to support a sector experiencing significant challenges in relation to its future growth and sustainability, and of course to learn more about the proposals for a formal tourist tax consultation.”

The STUC’s Grahame Smith welcomed the tourist tax: “By devolving tourist taxes to local authorities, the Government has recognised that this expanding economic sector is in need of an overhaul.

“Local taxes will bring welcome benefits for both communities and workers, who often work in low-paid and insecure roles.

“We look forward to working with the Government to explore how these tax changes can support the development of Fair Work and sustainable communities in every corner of Scotland.”

Scottish Retail Consortium director David Lonsdale, who earlier in the week warned of the uncertainty if MSPs did not back the Budget, was pleased to see it pass stage one, but was worried about the knock-on effect to businesses of hikes to council taxes.

“Higher council tax can eat into customers’ disposable incomes” he warned.

He added: “Firms will breathe a sigh of relief that MSPs are set to pass a Budget in a timely fashion, during a period when there is already more than enough political uncertainty.”

Though “far from perfect”, he said, much in the budget “should help support retailers and the wider economy.”