Local Government, Housing and Planning Committee report on Stage 1 of the Visitor Levy (Amendment) (Scotland) Bill

The Committee notes the difficulties in estimating costs to local authorities and businesses on a discretionary charge. The Committee also notes that the flexibility introduced by the Bill creates a challenge to estimate costs. However, it is a requirement that the Financial Memorandum contains the best estimates of costs. The Minister said the Financial Memorandum was developed in consultation with stakeholders. Stakeholders have come up with different estimates.

The Committee recommends that the Scottish Government should provide detail in the response to this report on the consultation it undertook with stakeholders on the Financial Memorandum and why there is a discrepancy between local authority and Scottish Government estimates.

The Committee recommends the Scottish Government should provide an update on the amendments it is considering for Stage 2 of the Bill, and any associated costs, at the earliest opportunity to allow members time to consider these ahead of Stage 2.

The Committee welcomes the Scottish Government's response to the calls of many stakeholders for flexibility.

The Committee supports the inclusion of the ability to choose between a percentage rate model or a flat rate model for each scheme a local authority establishes. However, we recognise that the introduction of multiple options represents the potential for a complicated landscape across Scotland, and indeed within individual local authorities. As the Committee previously recommended, it is essential the implementation of visitor levies across Scotland is monitored.

The Committee was supportive of the possibility of local authorities having the flexibility to develop more than one scheme during our considerations of the 2024 Act. However, we noted "the need to avoid unnecessary complexity for businesses". Local Government, Housing and Planning Committee. 10th Report, 2023 (Session 6). Stage 1 Report on Visitor Levy (Scotland) Bill (SP Paper 502)

The Committee is of the view that uncertainty over whether a chargeable transaction could be subject to more than one scheme is unhelpful. This is particularly acute as the Bill proposes to introduce considerable flexibility for local authorities to vary schemes throughout their areas. The Committee recommends that the Scottish Government should clarify this position in the Bill at Stage 2.

The Committee is supportive of the inclusion of options for local authorities to vary the application of a levy based on a fixed amount. These will allow local authorities to adapt to local needs and circumstances, as well as support a progressive element to the operation of the levy. This will protect budget accommodation, support rural and island economies, and avoid disproportionate impacts on lower-income visitors.

However, we recognise the potential difficulties involved in the per-person-per-night model.

The Committee recommends that the Government considers these issues and provides further clarity on its operation through Stage 2 amendments or draft guidance.

The Committee is supportive of the provisions in Section 2 of the Bill to clarify what constitutes a chargeable transaction.

The Committee seeks the Scottish Government's views on the potential misuse of this provision by artificially lowering the value of the initial transaction to minimise the levy payable.

The Committee recognises the general consensus on the clarification that returns made under section 26 of the 2024 Act should be based on the date of occupancy.

The Committee welcomes the Government's responsiveness to the evidence heard during the Stage 1 process and is supportive of shortening the consultation and/or transition periods appropriately to the scale of the changes local authorities propose to make to existing schemes.

The Scottish Government has confirmed it will make amendments at Stage 2, the content of which has not been considered. Given the expedited time frame for consideration of the Bill, the Stage 2 period will not be long. It is therefore imperative that the Scottish Government provides clarity on the time frames for consultation and transition periods where local authorities have already begun implementation of a percentage-based scheme and wish to change to a fixed rate model, or where local authorities wish to increase fixed-rate charges to reflect inflation.

The Committee recommends the Scottish Government should make clear at the earliest possible opportunity what the consultation requirements will be for those seeking to introduce additional schemes or amend existing schemes.

The Committee recommends that the Scottish Government set out its views on transition arrangements (both in the original Act and arising from the changes proposed by the Bill) and whether these are intended to be included in the Stage 2 and Stage 3 amendments it has already indicated will be proposed.

The Committee has considered this Bill at pace, in little more time than would be available to consider instruments laid under the affirmative or negative procedure. We do not consider the timescales available to the Committee to consider this legislation have been sufficient. While we recognise the importance of swift adaptation to unforeseen consequences, we believe the primary focus of this Bill – the basis on which the levy can be charged – was not unforeseen. It was raised by stakeholders during the passage of the 2024 Act.

The Committee is supportive of the inclusion of this provision to ensure that future unforeseen operational issues can be quickly remedied. However, this does not extend to policy changes such as the basis on which the fee is levied. It is right that the regulation-making power should be limited to amendments as to how the levy is calculated, charged and paid.

The Committee recommends the Scottish Government should reflect on whether this should extend to changes to the basis on which the levy is charged.

The timetable for this Bill has been challenging. Given that the Bill has arisen as a result of issues with the 2024 Act and the Scottish Government's change of view on the options which should be available for charging the levy, there is an argument to be made for careful and thorough scrutiny of the amending legislation. The Policy Memorandum could have included more justification for the expedited timetable the Bill has been subject to.

The Committee recognises the positive engagement the Scottish Government has undertaken with stakeholders in developing the Bill, while noting that the Scottish Government has not undertaken a formal, public consultation on it. Stakeholders were critical of the time available to respond to the Committee's call for views, which represents the only public, formal opportunity to comment on proposed changes to the operation of the visitor levy scheme framework.

The Policy Memorandum could have included more information about why other options such as a point-of-entry model were not included alongside the fixed-rate model given the justification for adding options was flexibility for local authorities.

Further information in the Policy Memorandum on why other tourism-related issues such as a cruise ship levy were not included in the Bill would also have been helpful. While recognising this is not in the Bill and the Scottish Government's position is that this would require separate primary legislation, the Committee seeks an update on the work to analyse the results of the cruise ship levy consultation which concluded in May 2025.

The Local Government, Housing and Planning Committee draws its conclusions and recommendations on the Bill to the attention of the Parliament and recommends that the general principles of the Bill be agreed to.

The Scottish Government has confirmed it will make amendments at Stage 2, the content of which has not been considered. Given the expedited time frame for consideration of the Bill, the Stage 2 period will not be long. It is therefore imperative that the Scottish Government provides clarity on the time frames for consultation and transition periods where local authorities have already begun implementation of a percentage-based scheme and wish to change to a fixed-rate model, or where local authorities wish to increase fixed-rate charges to reflect inflation.