Cruise Ship Levy: consultation analysis

8. How revenues from a cruise ship levy should be used

Chapter 8 considers respondents’ views on how revenues raised through a cruise ship levy should be used. The consultation paper notes that while the Scottish Government anticipates any cruise ship levy would follow the approach of the levy on overnight accommodation (i.e. the visitor levy), “there is merit in this issue being subject to consideration by the joint COSLA/Scottish Government Settlement and Distribution Group” as it would be “a further departure from the established financing mechanism for local government in Scotland”. The paper also mentions that revenues raised could be used to support facilities and services used by the cruise ship industry, and highlights the need to ensure any new provisions do not conflict with the Harbours Act 1964 (as amended).

Q10. How should revenue raised by a cruise ship levy be used? Select one. Please provide the reasons for your answer

Among those answering Q10, 56% felt that revenue raised by a cruise ship levy should be required to be spent on facilities and services used by cruise ship passengers or the cruise ship industry, 39% felt that a local authority should be able to use revenue raised by a cruise ship levy in any way it wishes and 5% were unsure. Views of individuals and organisations differed, however. Views were relatively equally split among individuals who answered, with 46% in favour of focusing on facilities and services compared to 50% who felt a local authority should be able to use the revenue raised as it wishes.

Among the organisations that answered, three quarters (75%) felt the revenue should be spent on cruise-related infrastructure. A majority of all types of organisations supported this approach, ranging from all cruise industry respondents to 57% of tourism-related respondents and other membership bodies. Two thirds (67%) of local authorities also felt revenue raised by a cruise ship levy should be required to be spent on facilities and services used by cruise ship passengers and/or the cruise ship industry, with one third (33%) indicating that a local authority should be able to use revenue raised by a cruise ship levy in any way it wishes.

Around seven in ten respondents left an open comment explaining their answer to Q10. In contrast to the closed-question results, a relatively similar number of comments were left about each of the two proposed options. Marginally more comments were made about revenue raised by a cruise ship levy being used in any way by a local authority, followed by the revenue being used for facilities and services. Another common theme was a call for transparency and accountability over how revenue raised by a cruise ship levy is used.

Revenue could be used in any way

Many respondents at the open question, around three quarters of whom were individuals, expressed support for local authorities being able to use revenue raised by a cruise ship levy in any way they wish, including non-cruise-related activities. The most common reason why respondents felt local authorities should have this flexibility was being able to invest in community improvements outside of ports and harbours. Many respondents suggested the money could be put towards local infrastructure like roads and recycling facilities, or invested in the environment and cultural heritage.

“The most pressing needs of the local community should be catered for first.” - Individual

“Services may also benefit local people but should have a tourist aim, e.g. maintained public toilets and waste disposal facilities” - Individual

The benefit of giving this flexibility to a local authority was also highlighted. Several respondents felt that local authorities would be best positioned to efficiently allocate revenue raised by a levy based on local priorities and needs. It is worth noting that this approach does not necessarily mean that respondents felt the revenue raised should be spent solely on non-cruise-related facilities and services; instead, they believed that local authorities are best placed to use the revenue in a manner that benefits both residents and visitors, which could still include cruise-related facilities and services.

“It will be important that local authorities have the flexibility to spend the revenue on facilities or services related to the wider visitor economy.” - The Highland Council

“Investing in visitor management and development that enhances the visitor experience while safeguarding community wellbeing.” - Destination Orkney

Revenue should be used for cruise-related purposes

The next most prevalent theme in open comments was for the revenue raised by a cruise ship levy to be used for cruise-related purposes; around two thirds of comments in this theme came from organisations. These respondents felt the revenue should be used to improve cruise ship infrastructure and offerings for cruise ship passengers. Many respondents suggested that the revenue should be ring-fenced and used to improve the facilities for cruise passengers and any related services to enhance their experiences, given that they are paying the levy. Some reflected that this approach would be important in justifying the need for the levy to passengers.

“Justification for a levy will inevitably be easier to sustain if it is shown to be used for the benefit of disembarking passengers.” – Individual

“This would allow the cruise companies to directly link the charges that they would pass on to their passengers to the structural improvements that those passengers will see and benefit from. No part of the revenue raised by a cruise ship levy should be absorbed into local authorities core budgets or used for projects that do not directly benefit cruise passengers.” - Port of Inverness

Some respondents called for the revenue to be spent on ensuring sustainable development in the cruise industry, making the case that this would support cruise tourism through promoting technological innovation and building resilience. A few of these were responses sharing similar language from organisations within the cruise ship industry. Within this theme, respondents highlighted the importance of preserving Scotland's reputation in this sector and encouraging more cruise tourism.

“The aim of a cruise levy in Scotland should be to ensure that affected communities are properly able to service future cruise visits and manage cruise activity in a sustainable way that brings local benefit. The use of any revenue raised should be tied to these principles.” - Outer Hebrides Tourism

“Any funds raised should go into supporting the sustainable development of cruise tourism, to encourage more cruise tourism, higher quality facilities, and to maximising the local benefits of cruise tourism. This could include improving visitor amenities; installing clear wayfinding and signage; supporting the development of cultural and heritage experiences; enhancing cruise passenger information and welcome services; improving passenger terminals and reception areas; enhancing traffic and transport management; Supporting investment in port security and border facilities; and upgrading and maintain berthing and mooring facilities. - Ambassador Cruise Line

Transparency & accountability

Another theme, mentioned by many respondents, was the importance of transparency and accountability regarding how revenue raised by a cruise ship levy is used. These respondents called for clear, visible, and public communication and reporting on how the revenue is spent to justify the need for a cruise ship levy to cruise passengers, operators, and locals in cruise destinations. Others commented on how transparency is crucial for gaining understanding, buy-in and acceptance of any levy.

“It should be transparent to all and for visitors, as visitors must realise that their visits do not just put a strain or have an impact on facilities, there is an impact on residents when ships are docked.” – Individual

“Measures to guarantee regular reporting and spending transparency are key to ensure that the sector can see where the money is being invested and to hold any council accountable to avoid a situation where levy funds are being displaced or misspent to fill local authority funding gaps.” - The Scottish Tourism Alliance (STA)

In response to Q5 (who should collect any cruise ship levy), a few respondents called for accountability and transparency, for example, through an independent body overseeing a traceable levy. This point was also raised at Q14 (any additional comments).

Other Comments

Some respondents stressed their view that a cruise ship levy should not be introduced in place of other local authority funding sources. For example, one individual stated that any levy should not be used to “fill a hole left by central government funding”.

A few respondents suggested that the approach to spending revenue raised by a cruise ship levy should mirror that taken in the Visitor Levy (Scotland) Act 2024 and that it should be reinvested locally in facilities and services for visitors to support the visitor economy.