Tourist Tax for the Scottish Highlands: Skye business owners offer contrasting views

Skye’s natural beauty makes it a magnet for tourists, but how best to fund infrastructure improvements to cope with the annual influx is a hot topic for debate

As the Scottish Government has launched a consultation on the possibility of introducing some form of taxation to fund infrastructure improvements for the benefit of tourism, CLARE WINSKILL and ANNE GRACIE GUNN write about their views on the proposed tax.

The case “For” – Clare Winskill, Coruisk House, Elgol

I want to see Skye become a world leader in destination management and a place that focuses on getting the best tourism growth for our island and our communities.

Nature is at the heart of Skye’s success. A tourism levy will help protect and enhance Skye’s natural and cultural heritage and environment and provide the opportunity for tourism planning. A tourism levy focused on conservation allows visitors to ‘buy-in’ to this island and its communities.

While taxes affect the margins made by businesses and the prices faced by tourists, they are also an important source of government and local authority revenue, which is used to finance the tourism sector. While price competitiveness is important to attract visitors, the quality of their experience here is vital and visitors should see that we care about this island and are committed to maintaining its beauty.

A tourism levy is required as part of a package of initiatives designed to maintain our environment so that tourism on Skye is sustainable, productive and inclusive and provides good experiences for both visitors and our own communities.

There are a range of possible tourism levies. Skye Connect has been asked by HIE to supervise an economic impact visitor survey over the course of next year. When the results of that survey are in and have been considered by everyone, then we will be able to see what can be done for a sustainable tourist economy on Skye.

Tourism industry representatives are very fond of saying that we have the highest VAT rates in Europe at 20 per cent. On Skye that does not tell the whole story.

Many small hospitality businesses do not reach the VAT threshold and are not VAT registered. For them income tax is the relevant tax and by comparison with Europe income tax rates are low which leads to increased rather than reduced price competitiveness.

Taxation must be viewed in context. In Germany and France, VAT on hospitality industries is lower but there are expensive tolls for the use of roads. €7 per person is to be charged for non-EU citizens to enter Europe following Brexit.

Other countries have been charging tourist levies for some time and many visitors now expect to pay them.

Instead of simply saying ‘no’ to any tourism levy, the hospitality industry on Skye should be engaging with government and the Highland Council to assess the funds required for a sustainable tourism economy to ensure that revenue from a levy is effectively collected and to ensure there is a package of levies rather than just a bedroom tax.

So, for example, day-trippers to Skye and campers could also pay their way perhaps through a number-plate recognition system. The cry goes up that the tourism levy is too complicated and therefore too costly to administer. The UK has just introduced the work-place pension. Everything is possible.

A zero-price for a priceless environment is not sustainable and does not provide the investment that Skye needs to have a productive and buoyant tourism economy.

As a global destination Skye remains unique in its beauty and potential. Substantial investment is required to maintain that unique position, to improve our visitors’ experience and to grow the tourism economy for the benefit of our communities.

In the short term rapid investment is required and in the long term sustainable investment for a sustainable tourism economy. A tourism levy in some form, or package of tourism levies, has an important part to play in both.

The case “Against” – Anne Gracie Gunn, Sonas Hotel Group

At the moment, Scotland as a whole is going through a very difficult economic period resulting from uncertainty caused by the very complex and protracted Brexit negotiations.

We have, in the Highlands, enjoyed a couple of good summers but as we all know this industry is fickle and cyclical.

We have had periods in the past when overnight the flow of tourists virtually stopped as a result of foot and mouth, the economic slump and the Icelandic Ash cloud, all of which almost brought the industry to a standstill.  This is clearly not the time to consider such an issue as a Tourist Tax.

We already feel an air of uncertainty sweeping the country and during the festive period reservation levels reflected this sentiment.

In the Highlands and Islands we are in an even more fragile position than our counterparts in urban areas. We are already challenged with our tourists having to pay high fuel costs to travel to our area; the area being expansive and remote although scenically wild and beautiful.

Introducing a Tourist Tax is yet another levy being added on to the visitor. Whether it is £1 or £50 it is another charge on a holiday and will be broadcast as such.

Our VAT rate is one of the highest in Europe and we are only one of three European countries not to apply a reduced rate of VAT on accommodation and Tourism services.

We, in Scotland, are competing against the rest of the world as a holiday destination and have to remain competitive. The Highlands are still a very seasonal destination, and although our peak summer months seem extraordinarily busy, many of our visitors are day trippers of one kind or another who don’t have the need or desire to use our accommodation or services whilst visiting.

Our domestic market which we rely on in particular for at least half of the year would seek alternative destinations to visit rather than the unwelcoming Tourist Taxed regions.

The recent introduction of vastly increased Business Rates is actually a Tourist Tax and an extra burden on businesses, all of which are already facing increased costs of fuel, labour, food etc, leaving little room for reinvestment back into the business be it a Café, Hotel, Restaurant, Bed & Breakfast, Pods, or Self-catering.

All this combined with significant administrative costs of yet another tax would make the overall gain insignificant.

A Tourist Tax would affect not only those involved in the tourism industry but most other trades as well.

It is clear to see when the visitor numbers are buoyant the other trades such as building and motor trade follow suit – jobs have to be protected at all costs. Our Industry leaders, after much research, have spoken out strongly against the Tourism Tax together with many other organisations such as the Federation of Small Businesses.

Lastly, we are very fortunate to have had a couple of buoyant years within the Highlands, securing more revenue for our Island, the Highlands and our country on a daily basis, to enable reinvestment back into our area.

More importantly, would we have thought a decade or two ago we would even be having such a conversation?

Both Clare Winskill and Anne Gracie Gunn are board members of SkyeConnect – the official Destination Management Organisation for Skye and neighbouring areas. It is a membership organisation seeking to represent the views and interests of every business, large and small, with an interest in the future of Tourism in the area.