COUNCILS need to know whether they will be given extra funding from central government to cover the costs of introducing and processing a new tourist levy, a leading professional organisation representing tax experts has warned.

In a written submission to a Scottish Government consultation on proposals to give councils the power to bring in a transient visitor levy, the Chartered Institute of Taxation (CIOT) urged ministers to ensure any costs associated with administering it are included in budget negotiations with council umbrella group the Convention of Scottish Local Authorities (COSLA).

The Institute said clarity was needed to make sure councils would have sufficient funding to carry out work to implement the levy such as compiling a register of eligible properties and extra staff costs.

In its budget deal with the Scottish Greens, needed to secure passage of its spending plans for the next fiscal year, the minority Scottish Government agreed to “consult, in 2019, on the principles of a locally determined tourist tax, prior to introducing legislation to permit local authorities to introduce a transient visitor levy”.

Edinburgh city council want to introduce the levy with a local consultation finding considerable backing among the city’s residents and businesses.

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It estimated the scheme could raise between £11.6 million and £14.6m per year if the levy was set at £2 or 2% of the cost of accommodation.

However, bodies representing tourism companies have been opposed to the scheme with the Federation of Small Businesses (FSB) raising concerns the levy could reduce overnight visitor numbers to the city.

In its submission to ministers, the CIOT added that its preference was for the Scottish Government to establish a national framework for operating the levy, providing guidance on how councils should administer the tax.

It said such a framework would make the tax easier to operate across Scotland, reduce burdens on businesses and make it easier for visitors to understand. It would also respect the independence and autonomy of councils to make their own decisions on whether they would choose to implement the tax and the amounts they would charge.

Alexander Garden, chair of the Chartered Institute of Taxation’s Scottish Technical Committee, said: “If councils are going to be given the power to levy taxes on tourists, then we think it is important that they know from the outset how they are going to be expected to pay for its operation. The consultation is silent on where the resources for administering and policing the tax would come from. Theoretically, this could come from existing council budgets, from a proportion of the money raised from the tax or from extra funding from central government.

“A nationally designed framework for operating the tax, providing clear guidelines on how the tax will be designed and what will be taxable, should be relatively straightforward to operate, even if individual councils choose to set different rates.

“But at a time when council budgets are already stretched, the Scottish Government and COSLA need to ensure that the costs of implementing the tax are included as part of future budget negotiations”.

Tourist taxes already operate in many European cities where the money raised is used to help fund local public services. Athens, Paris, Rome and Florence use a “progressive visitor levy” which charges a higher tax for a more expensive hotel room. Rome charges around £7 for a five-star room and £4 for a three-star room.