Cruise Ship Levy: consultation analysis

6. Rate of any cruise ship levy

This chapter presents respondents’ views on who should set the rate of any cruise ship levy. This builds on previous questions about what should form the basis of the levy.

Q7. Do you think the rate of any cruise ship levy should be set at a national level or should it be for a local authority to decide? Please provide the reasons for your answer

Over half (57%) of those answering felt the rate of any cruise ship levy should be decided by local authorities. This was the most popular option among both individuals and organisations, but stronger support was evident among individuals (63% compared to 46% of organisations). Three in ten (29%) felt the rate should be set at the national level, and 13% were unsure, with higher uncertainty among organisations (31% ‘don’t know’).

Views varied considerably by type of organisation. All local authorities who answered felt the rate of any levy should be decided by local authorities, while just over half (53%) of harbours and ports felt it should be set at the national level. Cruise industry respondents and tourism-related respondents were on balance more likely to favour a local authority set rate than a national rate, but 46% and 50%, respectively, of these audiences were unsure.

Three quarters of respondents left comments at Q7. Respondents were asked to provide more detail on the reasons for their closed-question answers. For this reason, the analysis below is structured according to comments relating to a local authority set rate, a nationally set rate and other considerations. For each option, the analysis presents positive and negative perspectives raised by respondents.

Local authority to decide levy rate

Reasons for support

Many respondents favoured local authorities deciding the rate of a cruise ship levy, believing they are best placed to take a responsive and flexible approach. Respondents highlighted the geographic spread and diversity of areas and communities affected by cruise tourism and therefore felt that a uniform national rate would fail to account for these regional differences. In contrast, enabling local authorities to set their own rate, which could vary by area, could ensure it is set at the most appropriate level to balance tourism and community impact in each location.

Many felt that local authorities had the best understanding of their communities' needs and unique dynamics. As such, these respondents felt that local authorities would best understand the impact of cruise tourism on their local area, and address these impacts accordingly, if they could set the rate of any levy themselves.

“Local authority decision making is also sensitive to the impacts such a levy would have on the local sector, the visitor economy, local businesses and communities.” - The Highland Council

Other themes mentioned by some or fewer respondents included, from most to least prevalent:

• The need to align the levy with the legislation introducing the Visitor Levy.
• That setting the rate locally could provide local authorities with the information they need to budget effectively.
• This approach means that decision-making will occur closest to the affected areas.

Reasons against

Many respondents highlighted concerns or potential challenges that could arise if local authorities set the rate of any cruise ship levy. A few specifically highlighted the operational and administrative demands that could be placed on local authorities, noting that they could become both costly and time-consuming, and may result in outsourcing the administration of the duty and further additional costs.

“Local council does not have a port presence, nor do they give direct visiting permission per ship.” - Individual

Some respondents felt that if local authorities were to set the rate of any levy, it could lead to misunderstandings and confusion. These respondents highlighted that a locally managed approach could create inconsistencies for cruise ship operators and port operators. Competition between ports was also noted as a concern by a few respondents, if destinations with a lower levy received more cruise ships compared to ports charging a higher rate. One individual expressed the view that this could put additional strain on the operations of any ports with lower levies. A few others noted the need to consider the possibility of external factors like local lobbying or vested interests influencing the levels set by local authorities.

“Setting the rate at the local level would run the risk of competitive distortion between ports and destinations within Scotland.” – Cruise Britain

Set the levy rate at the national level

Reasons for support

Reasons for supporting a nationally set levy were mentioned by many respondents. Several felt that it avoided local competition and would be a much fairer approach, as in theory, all destinations would be equal in terms of cost, with no port having a price advantage over another. Some noted that a nationally set rate would prevent local authorities from undercutting each other and minimise competition between ports, harbours and destinations.

"Remove any tendency for cruise ship companies to move to ports charging a cheaper levy, which may not be the most appropriate ports in terms of size and facilities etc.” - Individual

“This would avoid unintended displacement between ports and regions, where one authority chooses to apply the levy and another does not (or charges at a higher/lower rate). This would distort market economics and could disadvantage the regions who most need the income raised from any jobs created by cruise tourism.” - Port of Cromarty Firth

Another common theme mentioned by some respondents as a reason for setting a cruise ship levy at a national level was that it would ensure consistency and reduce confusion. Some respondents felt a consistent approach would benefit the administration and management of a levy, as well as ensure accountability and clarity. Within these comments, a few respondents highlighted that a national rate could alleviate collection challenges and avoid issues that could arise from local variations, such as cruise ship operators having to advise passengers of the differing rates applied at different ports.

A small number of respondents noted that a consistent national rate would allow for cruise ship operators to more easily factor any levy into their costs and budget accordingly.

Some respondents commented on how a national rate would be simpler and fairer, without providing additional detail.

Reasons against

In contrast, a few respondents expressed the view that setting a cruise ship levy at a national level could disadvantage Scotland against other countries that welcome cruise tourism. These respondents highlighted how Scotland could be at a competitive disadvantage to the rest of the UK or nearby European destinations that do not impose similar charges. Stornoway Port Authority noted that remote communities and smaller ports could be most affected if any levy is set too high:

“What may be considered acceptable for cruise in Edinburgh could be disastrous for Stornoway and, therefore, unviable for cruise line operations. The cruise industry is highly price-sensitive, and a national rate that does not account for local economic conditions and port scale could unintentionally penalise smaller, developing destinations.” - Stornoway Port Authority

Other considerations

Some respondents advocated for a combination of a local and national approach rather than one or the other. Within these comments, respondents emphasised the need for transparent communication and inclusive decision-making, with calls for industry representation in the design and governance of any proposed levy. It was proposed that discussions be held at a UK-wide level to help mitigate potential competitive disadvantages for Scottish ports.

Q8. If the rate of any cruise ship levy were to be set by individual local authorities, should an upper limit be set at a national level?

Among those answering Q8, 58% felt that if the rate of any cruise ship levy was set by individual local authorities, then an upper limit should be set at a national level. Three in ten (31%) disagreed, and 11% were unsure. However, organisations that answered were more likely to support this proposal, with 72% selecting ‘Yes’ compared to 50% of individuals. While a majority of most types of organisations were in favour of this approach, it was supported by 27% of local authorities and opposed by 64% of this group.

While there was no open-ended question following Q8, two respondents commented at Q7 on the need for a maximum levy rate to ensure it is set at a reasonable level. This point was also noted at Q14 (any additional comments).