Visitor Levy (Scotland) Bill: island communities impact assessment

Step Two – Gather your data and identify your stakeholders

What data is available about the current situation in the islands?

There is some data available on the size and composition of the accommodation industry on the island authorities. Table 1 sets out the number of accommodation premises on the Valuation Roll as at 1 January 2023 for each island authority, and for Scotland as a whole.

Source: Assessor Valuation Roll as at 1st January 2023, includes all properties with a description of ‘self-catering’, ‘hotel’, ‘guest house’ and ‘bed and breakfast accommodation’. Figures rounded to nearest 5, may not sum due to rounding.

In terms of accommodation types, all three island authorities have a higher proportion of self-catering properties in comparison with Scotland as a whole (82.9%). Correspondingly, the proportion of hotels, guesthouses and B&Bs is lower in the island authorities.

Table 2 below provides a breakdown of registered businesses and employment within Scotland’s accommodation sector by island local authority

Sources: ONS, Inter-Departmental Business Register (March 2022), Business Register Employment Survey 2021, Scottish Annual Business Statistics 2020 Notes: Each business is counted once in each area it operates in. The sum of the area business counts does not equal the overall Scotland total because each business is only counted once in the Scotland figures.

Note that these statistics do not capture very small businesses, typically those with a turnover under the threshold for paying Value Added Tax (VAT) on sales (£85,000 in 2022-23) and are not registered for PAYE.

For data on accommodation providers not on the NDR roll, there is some information available via the Small Accommodation Providers paying Council Tax Fund (SAP-CTF), which covered eligible businesses that did not pay non-domestic rates but paid council tax. Table 3 sets out the number of awards paid from the fund to these businesses in 2021, by island authority.

Source: Scottish Government, Coronavirus (COVID-19): Business Support Funding experimental statistics – Payment dates by Scheme from August 2020 to June 2021, April 2022

In terms of visitor numbers and spend, while there are no figures available for specific islands, figures from VisitScotland’s most recent Visitor Survey show that the Highlands and Islands region saw 2.3 million visitors between 2017 and 2019. This accounted for a fifth of both total overnight visitors and of visitor spend in Scotland.

Cruise ships

Cruise tourism in Scotland is heavily concentrated by geography and is of significant importance to many island communities. According to VisitScotland research, the Scottish cruise industry supports more than 800 employees, generating an estimated £23 million GVA for Scotland's economy. The Highlands and Islands^[3] account for the largest share of Scotland’s cruise tourism. In 2019, the Highlands and Islands accounted for almost three quarters of Scotland’s total cruise calls, and 61% of cruise passengers, largely at Kirkwall, Lerwick and Invergordon. Cruise tourism in the Highlands and Islands region was also estimated to be equivalent to 15.39% of overnight tourism volume and 2.54% of all tourism volume, 2.74% of overnight expenditure and 1.50% of all tourism expenditure in Scotland.

There are notably significant variations within this region for island authorities. The report estimates that cruise tourism in the island communities (Outer Hebrides, Orkney and Shetland) is relative to 57.68% of overnight tourism and 6.84% of all tourism each year, although the associated expenditure from cruise tourism is much smaller. In comparison, for the Isle of Skye cruise tourism accounted for just 16% of overnight and day tourism.

The report noted that the interplay between all the actors in the cruise tourism ecosystem is multifaceted and differs from port to port and from island to mainland destination. The relationship between ports was also observed, including competition between mainland and island ports – with the former tending to see island destinations as having a cachet for cruise lines that makes them more likely to call (for example at Stornoway rather than Ullapool.)

Examples of existing visitor levies in island communities

Tourist or accommodation taxes are common across Europe and include island communities. For example, Spain’s Balearic islands have operated a levy on overnight stays in tourist accommodations since 2016. The revenue from this levy is used to compensate the territorial and environmental impact of tourism on Mallorca, Menorca, Ibiza and Formentera.^[4]

Malta has operated an “environmental contribution” levy on overnight accommodation stays since 2016, the revenue from which is used to support and upgrade the local infrastructure in touristic areas around the Maltese Islands.^[5]

Engagement with tourist industry stakeholders has revealed that specific types of tourism (for example, cruise ship tourism) are more prevalent, and that for some islands this makes up a significant portion of their tourist economy.

Do you need to consult?

Yes. Although the policy is to provide a discretionary power to local authorities to use if they so wish, we believe it would be beneficial to consult with island communities to ensure that any issues or concerns are identified for the purposes of providing national guidance to local authorities on establishing a VL scheme.

How does any existing data differ between islands?

We have set out above the data we have on island authorities. In terms of accommodation types, the proportion of self-catering properties in Eilean Siar is slightly higher than in Orkney or Shetland (93.8% compared to 89.2% and 87.7% respectively). Correspondingly, the proportion of hotels is higher in Shetland (7%) and Orkney (6.9%) than in Eilean Siar (3.1%). The proportion of guest houses is smallest in Eilean Siar (3.1%), and largest in Shetland (5.3%).

In terms of the size of the accommodation industry in island authorities, Eilean Siar has a notably higher percentage of accommodation businesses as a proportion of the total number of businesses in its area (4.4%), compared to the national average of 1.7%.

Are there any existing design features or mitigations in place?

The Bill itself will have no differential impact on islands communities compared to the mainland. It will give all local authorities, including island authorities, the power to introduce a visitor levy in all or part of their area, but the use of those powers is at the discretion of a local authority should it be appropriate to local circumstance. For mainland local authorities that include island communities in its jurisdiction, the Bill will ensure that a VL can apply to all or parts of an area. This gives local authorities the flexibility on the geographical extent of a VL scheme, which will be of benefit when considering differential impacts on any island communities.