Impact of tourism tax in Edinburgh

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Tourists lining up for a couch tour

In a city where private home owners can rent out a two bedroom apartment for the month of August for as much as £6,000 (€ 7,770), Edinburgh is already one of the most expensive cities to visit in Europe and the United Kingdom. It is regularly voted to be in the top 10 most expensive cities in Europe and second in the United Kingdom, behind only London.

Earlier this year there were talks in Edinburgh City Council about how best to raise money for the arts and cultural sector of the city, with only of the most widely debated topics being that of a ‘tourism tax’ on the city.

The proposed tax has gained the support of many Edinburgh City Councilors from various political parties in the council. The political landscape in Scotland is still currently very fluid following last month’s parliamentary elections.

With the Scottish council elections due to take place next year however, this is something in which is still able to change over the next 12 months, and there are still ongoing debates surrounding the topic.

As I walk up the famous cobbled Royal Mile towards the impressive Edinburgh Castle that towers over the entire city, it is easy to see how much of an impact tourism has on Edinburgh. Tourists fill the street, especially on a rare sunny day in Scotland, as it is almost impossible to navigate your way around the different tour groups.

Bagpipes playing Flower of Scotland (the national anthem) and Loch Lomond ring out loudly with a new piper every 100 steps happily posing for photos with tourists and the busy shopping streets such as Princes Street and George Street are bustling with crowds.

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A Scottish bagpiper

Tourism is a booming industry in this vibrant city, with over 3.5 million visitors every year bringing in over £1bn (€ 1.3bn) to the city’s economy.
I spoke with Andrew Burns, leader of the Edinburgh City Council, who said that the proposed tax might not hit the pockets of the tourists too hard. It may start at only an extra £1 (€1.30) a night, potentially rising during peak times such as Fringe Festival in August or Hogmanay at New Year.

He said: “For Scotland’s Capital city, a form of Transient Visitor Levy – as part of a new package of local government funding – would make perfect sense as we aim to invest in our city. While an agreement is still be made, we are in talks with Scottish Government Ministers and our proposals for a levy form part of our City Deal negotiations.

“Edinburgh experiences spikes in visitor figures so we are looking at the mechanics of a levy which could vary depending on time of year. What we are suggesting could be as little as £1 per night which would generate £15m (€19.2m) annually which could be directed towards maintaining Edinburgh’s cultural offering and infrastructure.”

He stressed that as it is still an ongoing issue at the moment, nothing more can be said by the Council.

This is not the first time that such a tax has been discussed for Edinburgh though, with the idea also being debated in 2011. At the time, the Edinburgh city council said the tax could raise up to £10m a year by charging between an extra £1 and £2 per hotel room each night.

The Tourism Minister at the time, Fergus Ewing, said there were no plans to give local authorities the powers they needed to introduce such a levy, leaving it to be illegal for the city council to impose the tax. If the levy were approved, then there would have to be a change to the law, something that the council has already noted.

In 2006, the Scottish Arts Council recommended a “bed tax” as a possible source of extra funding for the city’s internationally renowned festivals.

The idea of a tourism tax has worked in other cities in Europe such as Barcelona, Berlin, Rome, and Paris. Edinburgh would be the first city in the United Kingdom to bring in such a tax if it is approved.

The tax has been in Berlin since 2014 and amounts to 5% of the room rate of stays less than 21 successive days, while in Paris it is fixed by the local authority and ranges from 15 cents to €1 and seven cents extra per night depending on the price and quality of the accommodation.

 

It is not only the City of Edinburgh Council who are in support of the plan, but also the Edinburgh Cultural Venues association (the ECV), the group who represent the biggest venues in the city including the national galleries, national museums, and King’s theatre.

The venues in the group backing the levy attract more than 6.2m visits to their venues every year, bringing in £194m (€248m) to Scotland’s economy and support 5,000 jobs. The association released a statement last year throwing their weight behind the campaign saying that it would raise some much-needed funds for the cultural sector of the city.

A statement said that the venues are facing “significant budget cuts, on top of many years of standstill funding. “Capital funding to maintain and improve these iconic venues remains challenging to secure. This adds to the challenges facing the festivals, which rely on many of these large arts venues as vital venues for their events.”

When I spoke to the ECV last month they said “Edinburgh Cultural Venues is hoping to explore and develop increasingly beneficial ways of working with the tourism sector to bring visitors to the city.

“It is also always looking for new ways to support the year round cultural infrastructure that makes such a huge contribution to Edinburgh’s success as a rich and wonderful city to live in or visit. We believe it is critical to find additional revenue streams to support this crucial but underfunded infrastructure in the city and that a levy is worth exploring alongside other options to identify the best model for Edinburgh.”

The view within many groups of the city that I managed to speak to seemed to be very much in favour of supporting the tax with a general view seeming to be the fact that the money has to come from somewhere.

Tourism groups such as the Edinburgh Tourism Action Group and the British Hospitality Institute have spoken out in the past against the proposal saying that it would have a negative impact on the tourism industry in the city; however, I was unable to speak with them before publication.

An art student in the city, Bethany Carey, has seen first hand the damage that the recent cuts to the arts and culture budget in Edinburgh has done and is in support of the tax. As a student, she has found it more difficult and expensive to find areas to put on exhibitions of her work (visual art and sculptures) than it would have been in years prior.

She feels that the money should be returned to the budget so as to better benefit the arts in the city when they are being knocked back so much already.

“It’s not really going to cost that much extra to individual tourists on their trips over and I believe if people are going to come to Edinburgh they won’t mind paying an extra tenner or so for the week’s holiday as the value of the city is still very high. A lot of people visit Edinburgh for its cultural and arts scene and so would probably be in support of paying a small amount extra to fund this side of the city.”

Another local person who is in favour of the tax is Ashley Noble, a manager of a hotel in the city centre. Despite working in the tourism and hospitality sector, she feels that it is a necessary tax that has not done damage to the tourism in other major European cities and would therefor not kill the tourism sector in Edinburgh.

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Man busking on the famous Royal Mile in Edinburgh.

“If you’re coming to Edinburgh you expect some historical accuracy to hit you. Tourists are basically living the Edinburgh past and history as they walk around the city. When I visited Rome I had to pay about extra each night (in a bed tax) but I didn’t mind for the city that I was visiting. When you go on holidays you expect to spend money.”

However, there is one additional issue that has arisen within debates around the topic: the free street acts who perform during Fringe. When I was speaking to Edinburgh locals about the proposed tax one of the citizens, Eileen Hewat, brought up the issue that it would be a huge extra production cost on the crews of these free shows.

“But what about all the free shows during the fringe who are barely scraping by on donations living in the cheapest of hostels? Even if it is only at the minimum amount suggested at only £1 a night, that’s still a minimum of £31 (€40) extra per person for the month of the fringe. Even these free shows have some pretty large crews. It’s going to deter acts from coming to fringe as well as tourists, or force them to start charging to their acts losing some of the charm of the streets during the festival.”

Street acts are a huge attraction to Edinburgh all year round, and as I tour the city more it is clear how even in May they bring flocks of people to a standstill with various live music or dancing on the streets. Walking around Edinburgh I spot several musicians busking as well as the famous bag pipers who bring that traditional Scottish heritage in their music to so many tourists. But they are never as popular as they are during the month of August for the world famous Fringe Festival.

If they were impacted as well, would it further the rise of the cost of visiting Fringe if there is not even the option of not paying for some shows?

Laughing Horse Festivals’ director Alex Petty helps run the Free Festival alongside Fringe every year says that cost of putting on a show hugely impacts whether or not these free shows can continue to run, however, it is uncertain if this proposed levy would have a large effect on them.

Overall, it seems unlikely that it will have a huge impact on tourism in the city. With many hotels starting at £40 a night per person and rising, it appears that the extra charge would not be too much of an extra burden on visitors, particularly having seen how it has worked so well in so many other cities over recent years.

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