Edinburgh tourism tax could form part of £1 billion city deal

The news comes as a senior councillor at Highland Council has suggested a tax on hotel rooms would raise millions of pounds to improve facilities and attractions in the north of the country.

The proposals for Edinburgh would come as part of the £1 billion city deal for the capital and ministers are understood to be supportive in principle of devolving a range of powers, including the ability to set and collect a visitor levy.

A similar plan was first suggested in 2011 when it was estimated that the council could raise up to £10m a year by charging between £1 and £2 per room each night in the city.

Should the revived plan go ahead now, it is believed Edinburgh would become the first UK destination to introduce such a charge, which would see around £1 per night added to a typical hotel bill.

However, city leaders also said they were keen to make the new system as flexible as possible, with customers at large hotels potentially paying more than those staying in smaller establishments.

They have also indicated a desire to see the tax applied throughout the year, and raised or lowered in response to changing levels of demand. This could see the levy hiked during busy periods such as summer and winter festivals.

City leader Andrew Burns said he was optimistic that the Edinburgh deal – which includes the three Lothian councils, Fife and the Scottish Borders – would be confirmed as “ongoing” in Chancellor George Osborne’s March Budget statement.

He said: “That means it’s in the final period of negotiating the detail and we would expect finalisation in late summer or early autumn.”

Meanwhile, Maxine Smith, leader of the SNP group on the Highland Council, said a charge paid by tourists could work in the region as it worked well in other parts of Europe and the US.

However, she said it could be a few years before such taxation was introduced across the country.

The SNP group, when it led Highland Council’s administration, proposed that visitors staying in hotels, guest houses and bed and breakfasts could be asked for a contribution towards roads maintenance and waste services.

Ms Smith said the extra charge would not discourage tourists coming to Scotland.

She said: “If you look at what has happened in Europe and the States it doesn’t put people off at all.

“In fact, when they know they are going to get better facilities and better attractions they are all for it.”

A spokesperson for the Scottish government said: “The Scottish government has no plans for a bed tax or tourism levy.”