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Highland business chiefs warn of tourist tax impact on cruise trade

By Staff Reporter- NOSN

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The cruise ship Prinsendam getting a helping hand leaving her berth at Scrabster during the summer. Picture: Hugh Millar
The cruise ship Prinsendam getting a helping hand leaving her berth at Scrabster during the summer. Picture: Hugh Millar

The introduction of a tourist tax could lead to lucrative cruise-liner traffic bypassing ports such as Invergordon and Scrabster, four leading Highland business organisations have warned.

In a joint submission to the Scottish Government’s consultation on a transient visitor levy (TVL), the chambers of commerce for Inverness, Caithness and Lochaber, plus the Cairngorms Business Partnership, raise their concerns on behalf of 1220 business members in the region.

The three chamber of commerce chief executives – Stewart Nicol (Inverness), Trudy Morris (Caithness) and Frazer Coupland (Lochaber) – have previously outlined their strong opposition to the levy in a submission to Highland Council.

Mark Tate, chief executive of the Cairngorms Business Partnership, has now added his voice to the campaign against local authorities being given powers to introduce the levy if they consider it right in their local circumstances.

Highland Council says a TVL is one option it is considering as a way of raising income to manage the impact of tourism and help it invest in the industry. It estimates a Highland transient visitor levy, or tourist tax, could generate £5 million to £10m a year.

In their submission, the four groups say they are concerned the Highland destinations for cruise liners in Scotland – Port of Cromarty Firth (Invergordon) and Scrabster – will be significantly affected if a TVL is applied to visiting cruise-line passengers.

“We believe there is a strong possibility that, in these circumstances, the operators will simply and immediately move to a different destination, as has been the experience in Amsterdam," they say.

“As well as our region being damaged by cruise liners moving to other Scottish ports, there is always the possibility that they would decide not to visit any port in Scotland at all.”

The chief executives also argue that the addition of VAT to any tourism levy will impose an additional administrative burden on all non-VAT-registered businesses, many of them small, rural B&Bs which are an important element of Highland tourism. They point out this extra layer of tax would also be collected and retained by Westminster and be of no benefit to Scotland’s local authorities.

In addition, they have "fundamental concerns" about "messaging", as the addition of a TVL in one part of the country would give a clear statement that it is more expensive than others to visit.

“Your proposal to allow each local authority to decide what is appropriate for their region, rather than a uniform regime across the whole of Scotland, will further exacerbate the situation," they say. "We believe that, in addition to influencing where visitors will choose to stay, such an additional layer of complexity to local taxation could deter inward investment to the sector.

The Caribbean Princess cruise ship at dock in Invergordon.
The Caribbean Princess cruise ship at dock in Invergordon.

“Further, many tourism businesses and accommodation providers operate across local authority boundaries. As such, they face having to deal with differing tax regimes in each of their locations which will impact significantly on efficiency through an increased bureaucratic burden and lost opportunity to benefit from economies of scale.”

The submission recognises the vital importance of tourism to the Highland economy and acknowledges the challenge Highland Council faces in responding to the infrastructure and service challenges. However, the four groups say they remain strongly opposed to a TVL as a mechanism to address these across Scotland.

They say the tourism sector is already facing unprecedented challenges with recruitment and retaining of skilled staff, a situation exacerbated by the prolonged and damaging uncertainty around Brexit.

“The sector has been under significant cost pressure in recent years, particularly around business rates. Regardless of how the levy is framed, this would act as a further unwelcome tax on this hard-pressed sector.”

The chambers’ submission also raises concerns that a levy collected on overnight stays would exclude day visitors and campervan users from contributing.

Inverness chamber chief executive Stewart Nicol said: “The four groups that have signed this submission all have a strong representation from the tourism sector within their memberships.

“We recognise the importance of the tourism sector to Scotland and our region’s economy. Indeed, we would argue that the Highlands plays a significant role in ensuring Scotland is one of the top tourism destinations in a global context.

“That is why we feel this levy would be wrong for our members and our visitors as it would send out a very negative message.”

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