How a tourist tax works in Europe as Scotland set to bring one in

A bill which would empower councils to introduce a visitor levy passed its first hurdle last week, with MSPs on a committee approving the general principles by 86 votes to 30.

But it has met with some criticism, with the Tories have said they are opposed to the plans, believing it will have a “real negative impact” on the hospitality industry.

'Common around the world'

However, marketing expert Professor Sameer Hosany, of Royal Holloway, University of London, who specialises in research on tourists as consumers, said a visitor levy is common not just in Europe but around the world.

He said: “I think sometimes tourists wouldn’t really see much in terms of what they are paying, as it can be very minimal.

READ MORE: Edinburgh's tourism has turned it into a derelict theme park

“The Institute of Fiscal Studies has estimated that a charge of £1 per person is going to raise around £420 million in England alone.

“So you think about it, it is just £1 and quite often, tourists would not even notice it.”

However, he cautioned that there was a need to make sure that it does not mean tourists get an unexpected addition to their bill.

“I remember when I first encountered the tourist tax I think in the US -  you book, you think that’s what you pay and then towards the end, you can really see it getting added to.

“I remember I felt a bit annoyed, a bit cheated as it had not been communicated upfront. You do feel cheated, even though it is £1 or £2 or whatever it is.

“It would have to be very clear and well-communicated so they know that is what you pay at the destination, you have to pay the tax. Then you are more prepared for it.

“But a lot of tourists just accept it is a common thing to do.”

In Italy, Spain and Amsterdam too ...

He said models for the tourist tax varied, with some based on a flat rate per visitor while others are charges based on a percentage of the room or apartment stay.

He pointed to the example of Rome which first introduced a tourist tax in 2011 based on accommodation type and the rate nearly doubled in 2014 following a review.

As of 2023, the charge per person in Rome ranges from €4 for a one-star hotel up to €10 for a five-star hotel. In 2016, the city raised €123m while in 2019 - the year before the pandemic struck - €123m was raised.

Barcelona introduced a tourist tax in 2012 with an increase staged over two years.

The tax in the Spanish city depends on the type of accommodation and ranges from €3.75 to €6.25. It was predicted to bring in €53m in 2023 and as much as €100m in 2024.

Amsterdam - which already has the highest visitor levy in Europe and the fourth highest in the world - announced it will increase its city tourist tax to 12.5% in 2024.

This means a tourist will pay an average tax of €21.80 per night with an average room rate of €175, and the revenue raised is projected to reach €65m in the next year.

READ MORE: What is a tourist tax and what will one in Scotland look like?

The plan for Scotland

Public Finance Minister Tom Arthur has said the Scottish Government will consider calls from industry for the levy to be a flat rate fee rather than a percentage of the accommodation cost.

It will apply to those staying in hotels, hostels, bed and breakfasts, self-catering accommodation, campsites and caravan parks.

Edinburgh Council has said it wants to be the first city in the UK to introduce the fee, estimating it could bring in around £15m a year.

Elsewhere in the UK, Manchester is one of the councils which has introduced a form of tourism levy using existing legal powers.

Under the scheme, “districts” set up by local business groups collect additional payments from hotels and serviced apartments with a rateable value of £75,000 or more, operating in specified areas.

READ MORE: Tourist tax should be used to boost tourism, claim industry leaders

Known as the “City Visitor Charge”, the £1 fee per room or unit per night is added to accommodation costs with businesses encouraged to itemise it on guests’ bills.

A spokesperson for Manchester Accommodation Business Improvement District (BID), said it was aimed at "delivering better visitor experiences and additional activity to drive more staying visitors".

The spokesperson added: “In terms of reaction, public sentiment has been neutral; possibly owing to the fact that these sorts of charges are now fairly common when travelling.

“The City Visitor Charge has enabled the Accommodation BID to support city-wide campaigns such as Manchester Pride and Halloween in the City, as well as launching new seasonal campaigns, well-received city street cleaning, and has supported bidding for major events and conferences that will come to the city region in 2024 and beyond.”