Tourist taxes: be careful what you wish for, because holidaymakers have choices too
In these divided times, seeing multi-party agreement is uplifting. The setting: Glasgow city administration committee on Thursday 19 June. SNP, Labour, Conservatives and Greens joined in voting in favour of the city's visitor levy.
From January 2027, people staying in hotels and all other commercial accommodation in Glasgow will pay 5 per cent on top of the bill. Each year, tourists and business travellers will provide £16m for the council to spend on civic improvements and promoting Glasgow.
Edinburgh has already decided to charge overnight guests 5 per cent on top of the room rate, starting in July next year. Good to see the two big Scottish cities agreeing on something, too.
Back in Glasgow, Ricky Bell of the SNP said there was 'no evidence to suggest that the introduction of a levy would be detrimental to the city'.
Free money, then. And (almost) nobody who lives and votes in Glasgow will pay it. What's not to like? A load of locations across Europe and the wider world already have similar tourist taxes. Paris and Rome hardly seem short of tourists, so Mr Bell is surely right: a levy will not deter visitors.
At the risk of disrupting such rare unity, I beg to differ. A couple staying in a three-star hotel in the French capital pay £9.50 per night in Paris tourist tax. I shall assume the room itself costs £110, which is what I have been seeing apart from during the Olympics slump last summer. With accommodation tax at 10 per cent in France, the pair will pay just short of 20 per cent in levies – which corresponds to the current rate of VAT in Scotland and the rest of the UK.
With their new 5 per cent charge, Edinburgh and Glasgow will leap ahead in the proportion they extract from tourists.
By next summer, the 'stealth' visitor tax on foreigners known as air passenger duty will extract £15 for European flights and £102 for North American visitors.
It all adds up. Edinburgh and Glasgow are great cities, and share freely with visitors their immense cultural wealth in the shape of world-class museums and galleries. The assumption is that tourist demand is inelastic – the city councils can put on taxes without dampening the desire to visit.
I am not so sure. If it were the case, why stop at 5 per cent – let's try 10, or 20?
The UK already looks unwelcoming, with a £16 admission fee in the shape of the Electronic Travel Authorisation and a refusal to accept perfectly secure European Union identity cards – disenfranchising around 300 million EU citizens who don't have passports.
Edinburgh is a special case. The capital is a huge tourism draw, home to the industry of government and a key business hub. But Glasgow does not enjoy such fortune.
If accommodation looks too pricey, visitors from northern England may switch to day trips; other tourists will stay at properties beyond the city's boundaries and the reach of the levy. Either way, the entire spend at a Glasgow property is lost.
Another unintended consequence could be that visitors switch to cheaper, characterless budget hotels rather than independent enterprises.
Imposing a flat levy across the year looks odd, too. To stretch the season and persuade people to visit off-peak, it would be smarter to have a 15 per cent tax for the four months from the start of June to the end of September, falling to zero for the rest of the year.
Fees for visitors are worthwhile if they are substantial and change behaviour
The shrewdest tourism tax I have seen in a long while is the brand-new €20 (£17) charge for each passenger arriving on a cruise ship to the Greek islands of Mykonos and Santorini from July to September.
Cruise firms are understandably cross that it has been introduced so late in the day. As Paul Ludlow, president of Carnival UK, told me: 'When things are sprung on us late, it's not the way in which we'd like to work.'
The principle, though, is sound: 'We really don't need thousands more people arriving for the day and contributing little to the islands' economies, so the least we can do is extract €50,000 from the average ship.'
I support every city, region and nation making choices about taxes and tourism. But every tourist has choice, too.
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