Tourism tax: discussion document

This document has been prepared to support our national discussion on transient visitor (tourist) taxes in Scotland. Comments can be sent to

2. Policy Context

This section sets out the broad policy context for underpinning the Scottish Government’s thinking in this area, covering our approach to growing the economy, and to taxation.

Scotland's Economic Strategy[1], published in 2015, sets out the Scottish Government’s framework for increasing growth and tackling inequality. Four priority areas are identified within the Strategy to direct policy action: Investment, Innovation, Internationalisation and the overarching theme of Inclusive Growth.

More recently, the Economic Action Plan[2] was published in October 2018, which reinforces the vision set out in the Economic Strategy and sets out the steps that the Scottish Government is taking to lead to a more prosperous and fairer society.

Tourism is significant contributor to this agenda. The sector is an important player in raising Scotland’s profile as an open, modern and internationally-facing economy, and has an important role to play in supporting inclusive growth, given its size and reach as an employer across Scotland.

The Scottish Government and our partners are taking forward a range of actions to support sustainable growth within the sector. We have supported the development of world-class visitor attractions, such as the iconic V&A Dundee, and established the Rural Tourism Infrastructure Fund to provide investment in infrastructure to support sustainable growth in rural tourism across Scotland. VisitScotland continues to undertake innovative approaches to marketing Scotland on the world stage, while our Enterprise Agencies provide a range of business support, including one to one support through account management. Through our mandatory Rural Rates Relief scheme, our Small Business Bonus Scheme, and our transitional relief for the hospitality sector, we have helped a number of small rural hotels to cope with increasing business costs. Along with our visitor economy agencies, we are supporting Digital Tourism Scotland, which will improve the digital skills and capabilities of tourism businesses. We are also continuing to make strategic investments in infrastructure, including through the Digital Superfast Broadband Programme and Mobile Infill Action Plan, to support the sector’s continued growth and development.

In considering taxation policy, the Scottish Government is guided by Adam Smith’s principles, which underpin the Scottish approach to taxation:

  • Certainty: Certainty is important for households and businesses alike to ensure that financial decisions can be taken from an informed position on the path of future tax policy.
  • Convenience: Decisions made on taxation should not needlessly impact on the convenience of the current system, and should seek to minimise the administrative impact and burden on taxpayers.
  • Efficiency: As the administration, collection and enforcement of existing and new taxes involves costs for those involved, it is important that policy is designed efficiently to minimise the cost of implementation and operation.
  • Proportionality: Proportionality to the ability to pay (often referred to as progressivity) in taxation is vital. Everyone benefits from public services and all those who can contribute are expected to do so, but those with the broadest shoulders should bear the greatest burden.

As well as Adam Smith’s founding principles, the Scottish Government’s approach to tax is based on a firm approach to tax avoidance; and a commitment to engagement with stakeholders. This national discussion forms part of our ongoing commitment to engage proactively with stakeholders on taxation issues.

This national discussion also takes place within the context of a number of wider engagements, particularly the upcoming Local Governance Review. The Local Governance Review reflects local and national government's shared commitment to subsidiarity and local democracy, and builds on joint agreement between COSLA and the Scottish Government to focus on and strengthen local and community decision-making and democratic governance in ways that improve outcomes in local communities, grow Scotland's economy for everyone's benefit, support communities to focus on their priorities, and help new ideas to flourish.

The Review will explore what might be achieved, and highlight opportunities for positive change. In doing so it brings a wide range of Scotland's public services into scope, takes cognisance of reforms where work is already progressing, and will include powers and functions held at national level.

With this context in mind, the Scottish Government is keen to explore the following broad issues within the national discussion:

  • What would be the reasons for introducing a transient visitor tax?
  • What would a well-designed and operated transient visitor tax look like?
  • What positive and negative impacts could a transient visitor tax have?
  • How could a transient visitor tax be used, and how can revenue be distributed fairly?

The remainder of this document sets out a range of evidence to help inform discussion of these issues.


Email: Kevin Brady

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