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Caithness Chamber of Commerce Cautions on Tourist Tax

Caithness Chamber of Commerce was alarmed to see that, earlier this month, Kenny MacAskill MSP made a public call in The Herald for the introduction of a new tax on tourism, citing the cost of tourism to the public sector.

Speaking about Mr. MacAskill’s comments, Chamber Chief Executive Trudy Morris said:

“It is disappointing to see the spectre of a tax on tourism once again rearing its ugly head. Tourism has long been one of the key drivers of the Scottish economy and for the Highlands in particular, supporting around 20,000 jobs and worth around £913m to the local economy.

“Tourism in Scotland is already over-taxed as a sector. The UK is almost the only EU member state to apply VAT at the standard rate to tourism activities, despite the fact that the EU permits any member state to reduce tourism VAT without the need for any new legislation. When this is added to the UK’s unusually high rate of Air Passenger Duty, the costs of tourism in Scotland (and the rest of the UK) quickly mount up. Indeed, the World Economic Forum in 2013 ranked the UK 138th out of 140 countries for price competitiveness in the travel and tourism industry.

“We would also note that, as an industry which cannot be outsourced or offshored, revenue generated from tourist activities tends to remain within the local community. Anything which impacts negatively on the tourism industry is likely to have wider ramifications for local economies, particularly in rural areas such as Caithness.

“While the Scottish Government has stated that they have no plans at this time to bring such legislation in nationally, we remain concerned that local authorities may nonetheless implement some version of such a tax on a regional basis. We opposed Highland Council’s proposals to bring in a similar levy in 2014, and would stand in strong opposition to any such proposal in the future.

“A tax on tourism, while potentially attractive as a way to raise revenues in the short term, would undoubtedly cause long term damage to one of the key growth sectors for Caithness, the wider Highlands, and Scotland as a whole.”