Ahead of next weeks Budget, the British Hospitality Association Scottish Licensed Trade Association and the Scottish Tourism Alliance have today submitted the letter below to Derek Mackay MSP, Cabinet Secretary for Finance and Constitution.
Dear Mr Mackay,
Scottish Budget 2018 - 2019
This letter comes from the British Hospitality Association, the Scottish Licensed Trade Association and the Scottish Tourism Alliance - the latter being the overarching representative body for tourism in Scotland. As you prepare the 2018 - 2019 Scottish Budget, we ask that you consider two issues of considerable concern to hospitality, licensed and tourism businesses in Scotland:
1. Ending the Large Business Supplement (LBS) that is acting as a hotel tax on Scotland’s hospitality venues;
2. Dismissing the recurrent threat of the imposition of any form of tourist tax, bed tax or transient visitor levy.
More and more visitors are flocking to Scotland every year and tourism is thriving: it is one of our fastest growing commercial sectors and supports and sustains over 200,000 direct jobs.
In spite of this, many hotels and venues across Scotland are struggling to survive due to a number of factors: relentless increases in costs, consumer uncertainty, pressures on margins and, in no small part, due to the Scottish Government’s punitive Large Business Supplement. Its misleading name hides the fact that the LBS represents a tax on many family-owned, local companies.
In Scotland, LBS is double the rate applicable in England. The Barclay Review’s headline suggestions to support economic growth called for the Large Business Supplement to be reduced. Your predecessor, John Swinney, understood well the importance of Scotland’s business rates being no higher than those of the rest of the UK. As you know, we welcome the cap you have placed on business rates increases for the current and next financial years. We acknowledge your statement to Parliament on 12 September that you would aim to reduce LBS by 50% (to 1.3p/£) by 2021. However, considering that 99.8% of businesses who appealed their 2017 non-domestic rates revaluation are still awaiting a verdict, the reduction in LBS is more pressing than ever. Scotland’s larger hotels (those with a rateable value greater than £51,000) simply cannot afford to wait another year for support from the Scottish Government.
In your Budget, we ask that you listen to the industry and reduce the Large Business Supplement to the same rate as applies in other parts of the UK.
As you are aware, business representative bodies for the tourism industry are opposed to the introduction of any new taxes or levies on our consumers. This includes the prospect of any tax on hotel guests, visitors using other forms of commercial accommodation, or other visitors to Scotland such as motor-home-users or cruise passengers disembarking at our ports.
Whilst we welcome your observations during our meetings with you that the Scottish Government has no plans to introduce a so-called tourist tax, we are extremely concerned about recurring calls from local authorities in Scotland (and, indeed, in other parts of the UK) for powers to be granted to enable a range of new locally-imposed taxes.
We believe that any additional taxes on tourism consumers (be they residents of Scotland, the rest of the UK or international visitors travelling for leisure or business purposes) will be detrimental to an industry that has delivered sustained economic benefit to Scotland despite a lack of price competitiveness, especially compared to most of our European neighbours who apply VAT to tourism services at a rate of more than 50% less than that applicable to the UK (20%). Moreover, the majority of cities, regions and countries in Europe that apply some form of tourist tax do so against a backdrop of this favourable rate of VAT on tourism.
Now is the time to support Scotland’s flourishing hospitality sector and put an end to the uncompetitively high level of LBS. It is also time, once and for all, to quash any prospect of the introduction of any form of tourist tax or levy.
Calum Ross, Chair, British Hospitality Association, Scotland
Marshall Bain, President, Scottish Licensed Trade Association
Stephen Leckie, Chair, Scottish Tourism Alliance
6 December 2017