Supplementary Pack 1
Argyll and Bute Council · 30 October 2024
Back to Short Life Working Group on Argyll and Bute Council Visitor Levy — 30 October 2024 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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Argyll and Bute Council Comhairle Earra-Ghàidheal Agus Bhòid Executive Director: Douglas Hendry Kilmory, Lochgilphead, PA31 8RT Tel: 01546 602127 Fax: 01546 604435 DX 599700 LOCHGILPHEAD 25 October 2024 SUPPLEMENTARY PACK 1 SHORT LIFE WORKING GROUP ON ARGYLL AND BUTE COUNCIL VISITOR LEVY - BY MICROSOFT TEAMS on WEDNESDAY, 30 OCTOBER 2024 at 2:00 PM I enclose herewith item 4 (ARGYLL AND BUTE COUNCIL VISITOR LEVY) which was marked to follow on the Agenda for the above meeting. Douglas Hendry Executive Director ITEM TO FOLLOW 4. ARGYLL AND BUTE COUNCIL VISITOR LEVY (Pages 3 - 20) Report by Executive Director with responsibility for Development and Economic Growth Short Life Working Group on Argyll and Bute Council Visitor Levy Councillor Anne Horn Councillor Jim Lynch (Chair) Councillor Julie McKenzie Councillor Ross Moreland (Vice-Chair) Councillor Gary Mulvaney Councillor Peter Wallace Kirsty Flanagan Douglas Hendry Pippa Milne Contact: Hazel MacInnes, Senior Committee Officer Tel:01546 604269 Public Document Pack
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ARGYLL AND BUTE COUNCIL VISITOR LEVY SHORT LIFE WORKING GROUP DEVELOPMENT & ECONOMIC GROWTH 30th OCTOBER 2024 UPDATE: ARGYLL AND BUTE COUNCIL VISITOR LEVY 1.0 INTRODUCTION 1.1 The purpose of this paper is to provide members of the Visitor Levy (VL) Short Life Working Group (SLWG) will an update on and gain their input to the preparatory work for the draft Argyll and Bute Council VL Scheme. 1.2 Further to the VL SLWG meeting on 1st October, the formal VL Guidance for local authorities was published in the public domain on 4th October 2024. With reference to the guidance document, detail statutory and non-statutory activity already undertaken by elected members, council officers and members of the Shadow VL Forum, complete with a revised timescale of ongoing preparatory consultation and engagement work, is outlined in Table 1 in the report. 1.3 With regard to the pre-consultation preparatory work, particular consideration is required on the timing of the draft Argyll and Bute Council VL Scheme and associated papers for the full council meeting on 21st November. In order to conclude the pre-consultation activity and use the feedback to shape the draft VL Scheme as appropriate, a separate Special Council meeting is sought in December 2024 where the meeting will solely focus on the Argyll and Bute Council VL Scheme. 1.4 The latest draft Argyll and Bute Council VL Scheme is outlined in Appendix 1 of this report, complete with the initial impact assessment work contained in Appendix 2. The activity to date to shape these current draft documents is outlined in the report, with reference to Table 1. 2.0 RECOMMENDATIONS 2.1 Members are asked to: • Note and consider the content of this paper. • Consider and comment on the activity and timescales noted in Table 1 of this report. • Endorse the requirement for a short paper to go to the full Argyll and Bute Council meeting on 21st November 2024 to seek more time to conclude the pre-consultation activity and preparatory work, with the draft Argyll and Bute Council VL Scheme and associated papers being considered at a Special Council meeting in December 2024 (date to be confirmed). • Consider and comment on the latest draft Argyll and Bute Council VL Scheme and initial impact assessment work outlined in Appendices 1 and 2. Page 3 Agenda Item 4
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3.0 DETAIL 3.1 The main focus of this report is to advise the VL SLWG members of and seek their input on the preparatory activity that has taken place since the meeting on the 1st October 2024. For ease of reference this has been depicted in Table 1 of this report. This is an updated version of the Table 1 outlined in the Special Council paper on 15th August 2024. 3.2 Given that the formal VL Guidance has been published, one material change is that the formal consultation period has been amended to the 12-week recommended timescale. It is important to align to the key requirements within the VL Guidance, particularly those noted as statutory, to avoid the possibility of having to restart the 18-month implementation period. 3.3 As noted in Table 1, the pre-consultation survey will close on Monday, 28th October. At the time of writing this report 1,064 responses had been received. It is hoped that an initial summary of the responses can be reported verbally to the VL SLWG on the 30th October to assist in how, within statutory boundaries, these responses will help to shape the draft Argyll and Bute Council VL Scheme that will be issued for formal consultation by the end of this calendar year. 3.4 The feedback from the six VL stakeholder consultation sessions organised by members of the Shadow VL Forum (Argyll and the Isles Tourism Co-operative and VisitScotland) on 23rd and 30th (x2) October and 6th. 7th and 14th November 2024 will be provided at the next VL SLWG meeting in the latter part of November (date to be confirmed). 3.5 Argyll and Bute Council officers are working with professors from the University of Edinburgh Business School to look at forecasting the potential level of Visitor Levy income using a working rate figure of 5%. They worked with the City of Edinburgh Council on their forecasts. The data available regarding accommodation providers, their bed spaces and occupation rates is limited but officers are confident robust estimates will be ready for the proposed Special Argyll and Bute Council meeting in December 2024. 3.6 The exact mechanism for billing and collecting the levy is still under discussion, including the development of a national platform through discussions with the Improvement Service. More details will be provided in due course. Argyll and Bute Council will ensure compliance, with penalties and debt recovery processes in place for non-compliance. Establishing a robust internal team for project management, enforcement, and data analysis will be necessary to support the implementation of the VL and any supporting systems. Page 4
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3.7 Table 1 below outlines an indicative timeline of activities for the establishing and implementing of a visitor levy including key council meetings. The text in italics mirrors that in the VL Guidance document and statutory requirements are highlighted in light blue. Table 1: Indicative Timeline of Activities to Establish a Visitor Levy (VL) aligned to the final VL Guidance Document Indicative Timeline Activity Statutory Requirement Pre-consultation work Ongoing Local authorities undertake work to understand their local visitor accommodation sector and set up necessary cross working between local authority departments. VL Officers’ Working Group (OWG) established on 2nd July 2024 and meets fortnightly. Members of the VL OWG are from key council functions, such as Economic Growth, Revenue and Benefits, Communication and Customer Services. Argyll and Bute Council officers are working with professors from the University of Edinburgh Business School to look at forecasting the potential level of VL income using a working levy rate of 5%. Ongoing Local authorities engage with stakeholders to develop visitor levy proposal. Shadow VL Forum is established: inaugural meeting on 7th October and a workshop session on 24th October. The next meeting is scheduled for 14th (p.m.) November 2024 Members of the Shadow VL Forum (AITC and VS) have set up six VL stakeholder consultation sessions on 23rd and 30th (x2) October and 6th. 7th and 14th (a.m.) November 2024 which will be attended by officers from the OWG. Pre-consultation survey issued on 11th October and closes on 28th October 2024. Ongoing Discussion and debate at relevant local authority committees. VL SLWG (public meeting) established and chaired by the Council Leader. VL SLWG comprises of four members of the Administration and two members from the Opposition. First meeting, 1st Oct and the next scheduled for 30th October. Elected Members Seminar on the VL, attended by industry reps/Shadow Forum members from AITC and VS on 16th October. VL paper approved at a Special Council meeting on 15th August 2024. Ongoing Local authorities to prepare for consultation. Argyll and Bute Council web page went live on 9th October, https://www.argyll-bute.gov.uk/my-community/recreation- and-leisure/argyll-and-bute-visitor-levy complete with an inbox Abvl@argyll-bute.gov.uk for questions and a link to FAQs. An internal ChatBot is being developed to assist in fielding FAQs. Oct 2024 Objectives of VL Scheme to be developed. Aligned with the four strategic objectives/priorities within the Argyll and the Isles Strategic Tourism Partnership Strategy. The objectives have been tweaked slightly at the Shadow VL Forum meeting on 24th October to mirror the work already underway by the AISTP (five of which are Shadow VL Forum members) to prepare a revised strategy, spring 2025. √ Oct/Nov 2024 Impact studies to be carried out as required. Initial draft impact studies are outlined for consideration in Appendix 2 of this VL SLWG paper, 30th October 2024. √ Page 5
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Table 1: Indicative Timeline of Visitor Levy (VL) Implementation Requirements (continued) Indicative Timeline Activity Statutory Requirement Nov 2024 Develop draft VL Scheme to be proposed. Preparation of the draft Argyll and Bute Council VL Scheme is ongoing with key input from the VL SLWG and will be informed by the results from the pre-consultation survey and VL stakeholder session discussions. A final draft will be included in the paper pack for a proposed Special Argyll and Bute Council meeting in December 2024. Nov 2024 Plans for use of net proceeds of the VL Scheme to be developed. Feedback sought in the pre-consultation survey and from the workshop session with the Shadow VL Forum (initial summary included in the draft VL Scheme document in Appendix 1 of this paper. Input and discussions at the VL SLWG for what is included in the draft Argyll and Bute Council VL Scheme. Dec 2024 Agreement of draft VL Scheme by the local authority. Draft Argyll and Bute Council VL Scheme, and all supporting documentation, to be considered at a proposed Special Argyll and Bute Council meeting in December 2024. Formal Consultation Late Dec 2024 – mid Mar 2025 Public consultation on entire draft Argyll and Bute Council VL Scheme proposal (standard practice is 12 weeks) Timescale aligned to approval of draft Argyll and Bute Council VL Scheme and associated documents at a proposed Special Argyll and Bute Council meeting in December 2024. √ Mar/Apr 2025 Analyse and report findings on the local authority committee, including potential changes to the Argyll and Bute Council draft VL Scheme in light of the consultation. VL OWG analyse findings working with the VL SLWG and input from the Shadow VL Forum, as appropriate. Governance Requirements Apr/May 2025 Formal public announcement of decision to introduce a visitor levy or not (include start date in late 2026). Report to a Special Council meeting in April / May 2025 (dependent on response from the formal consultation to prepare a final Argyll and Bute Council VL Scheme for approval). √ May/June 2025 Minimum 18-month implementation report begins. Official start date for 18-month period to be confirmed nearer the time. √ May/June 2025 Scottish Ministers to be notified of decision to introduce a visitor levy across Argyll and Bute. √ May/June 2025 Establish a Visitor Levy Forum within six months of formal public announcement of a decision to introduce a VL Scheme. Augment current Shadow VL Forum to establish a the main VL Forum (advisory function) to be maintained for the duration of the scheme (meet at least two times per calendar year). √ Mid-June 2025 Argyll and Bute Council to advise businesses of their liability and prepared administration of Argyll and Bute Council VL Scheme. Page 6
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Table 1: Indicative Timeline of Visitor Levy (VL) Implementation Requirements (continued) Indicative Timeline Activity Statutory Requirement Governance Requirements Mid-Dec 2026 Implementation period expires. Late Dec 2026 The Argyll and Bute Council VL Scheme comes into force, and the VL is collected and remitted to Argyll and Bute Council. √ Dec 2027 Annual report on the Argyll and Bute Council VL Scheme An annual report will go to a full Argyll and Bute Council meeting, where the paper will be in the public domain. √ Source: VL Guidance and Officer Commentary Page 7
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Feedback from the Shadow VL Forum Workshop Session 3.8 At the Shadow VL Forum workshop on 24th October, the strategic priorities within the Argyll and the Isles Strategic Tourism Partnership (AISTP) Visitor Economy Recovery and Growth Strategy were revisited and one tweaked slightly to mirror the work already underway by the AISTP (five AISTP members are Shadow VL Forum members). The third objective is now about “sustaining and improving the offer”. This is depicted in the latest draft Argyll and Bute Council Visitor Levy Scheme in Appendix 1. 3.9 Work was undertaken to provide some initial broad year-on-year (short to longer term) investment opportunities that could be supported by the net visitor levy proceeds under each of the strategic priorities (see Appendix 1). Such funds could have the potential to lever in additional public, private and/or third sector investment funding. However, this work needs to be informed by the responses from the pre-consultation survey which asked about suggested uses of the funds generated by the visitor levy and from the VL stakeholder sessions currently underway. In addition, the consultation responses may be able to categorise investment opportunities into those appropriate for capital and revenue expenditure. 4.0 CONCLUSION 4.1 The purpose of this paper is to provide members of the Visitor Levy (VL) Short Life Working Group (SLWG) will an update on and gain their input to the preparatory work for the draft Argyll and Bute Council Visitor Levy Scheme. 5.0 IMPLICATIONS 5.1 Policy: the visitor levy has become law following Royal Assent of the Visitor Levy (Scotland) Bill and the VL Guidance has been published. 5.2 Financial: as an early adopter, the council may be required to make an initial contribution to the build costs for the proposed national digital platform (if this is the preferred approach) which will be recouped. The implementation of the levy could generate a substantial yearly income for Argyll and Bute Council subject to scrutiny from the Visitor Levy Forum. At present the University of Edinburgh is undertaking detailed forecasting work on the income to be accrued based on a 5% levy (working figure) using the Scottish Tourism Economic Activity Monitor (STEAM) data. 5.3 Legal: all appropriate legal implications will be taken into consideration. 5.4 HR: the VL SLWG is supported by officers from the VL OWG and members of the Shadow VL Forum. 5.5 Fairer Scotland Duty: the Fairer Scotland Duty, Part 1 of the Equality Act 2010, came into force in April 2018. The duty places a legal responsibility on particular public bodies in Scotland, such as Argyll and Bute Council, to pay due regard to (actively consider) how they can reduce inequalities of outcome, Page 8
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caused by socio-economic disadvantage, when making strategic decisions and how this has been implemented. 5.5.1 Equalities: none. 5.5.2 Socio-economic Duty: none. 5.5.3 Islands: the same visitor levy scheme, with the same percentage rate charged for overnight accommodation, will cover the whole of Argyll and Bute, including accommodation providers on the islands. It is anticipated that this nominal rate will not disproportionately impact island accommodation providers any more than those based on the mainland throughout the region. 5.6 Climate Change: none. 5.7 Risk: there is a risk that the Argyll and Bute Council does not implement the visitor levy process in adherence to the Scottish Government timelines which could delay implementation. 5.8 Customer Service: there is a need to implement an efficient visitor levy process that is transparent and easy to use by our customers. 5.9 The Rights of the Child (UNCRC): none. Kirsty Flanagan, Executive Director responsible for Economic Growth Councillor Jim Lynch, Leader of Argyll and Bute Council 25th October 2024 For further information contact: Fergus Murray, Head of Development and Economic Growth fergus.murray@argyll-bute.gov.uk Ishabel Bremner, Economic Growth Manager ishabel.bremner@argyll-bute.gov.uk APPENDICES Appendix 1: Draft Argyll and Bute VL Scheme. Appendix 2: Draft Impact Assessment: Argyll and Bute Council Visitor Levy Scheme Page 9
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Appendix 1: Draft Argyll and Bute Council VL Scheme Draft Argyll and Bute Council VL Scheme Argyll and Bute Council intends to utilise the powers granted by the Visitor Levy (Scotland) Act 2024 to impose a levy in respect of persons staying in certain types of accommodation overnight in its local authority area. 1. Levy start date The scheme will come into force 18 months after the final approval date in which Argyll and Bute Council publishes its final scheme. This report will summarise the consultation responses received and will state that it intends to proceed with the original or modified proposal. 2. Levy duration The levy will apply indefinitely. As note in the Visitor Levy (Scotland) Act, Argyll and Bute Council is required to review its VL Scheme after a set period, see Section 8 below. 3. Accommodation liable for the levy The levy will apply to all chargeable overnight accommodation within Argyll and Bute Council boundary. This includes: • Hotels; • Hostels; • Guest houses; • Bed and breakfast accommodation; • Self-catering accommodation, including short-term lets; • Camping sites; • Caravan parks; • Accommodation in a vehicle, or on board a vessel, which is permanently or predominantly situated in one place; and • Any other place at which a room or area is offered by the occupier for residential purposes otherwise than as a visitor’s only or usual place of residence. 4. The levy rate As present a 5% levy (working figure) is proposed and will apply year-round, raising an estimated £9m in gross revenue (this figure is an indicative range and does not take into account the effect of statutory exemptions, caps and exclusions). The levy rate will be the same across the entire local authority area. At present the University of Edinburgh is undertaking detailed forecasting work on the income to be accrued based on a 5% levy (working figure) and on Scottish Tourism Economic Activity Monitor (STEAM) data for Argyll and Bute. A verbal update on this work can be provided at the VL SLWG on 30th October. Page 10
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5. Collecting and enforcing the levy Accommodation providers within the local authority area will be liable for the levy. They will be required to submit quarterly reports (could be monthly – still to be determined) detailing the total accommodation charges and the total levy collected to a national and/or local online visitor levy portal. The levy will be payable at the same time as submitting returns. (There is the potential to mirror the submitting timelines under current scheme such as VAT returns or short term lets). Accommodation providers are required to keep accurate records of all transactions that are subject to the levy. The council will conduct inspections, as required, to ensure compliance with the scheme and remittance requirements (more information to be provided). Accommodation providers who fail to comply will be subject to penalties. Appeals relating to decisions made by the council on the operation and/or enforcement of the scheme can be registered via an online portal or email address. The council will aim to review and process these appeals within 28 days. 6. Exemptions, exclusions and caps The key focus for the administration of the Argyll and Bute Council Visitor Levy Scheme is to keep it simple. It is recommended by officers that only the exemptions and exclusions noted in the Act are included, as noted below. Please note, a question on the potential to cap the levy to a certain number of nights has been included in the pre-consultation questions. Act exemptions and exclusions The Visitor Levy is payable by anyone staying in accommodation which is not their only or usual place of residence (temporary or otherwise). Individuals from the below categories are not required to pay the levy: • Those who are homeless or at risk of homelessness. This includes those who are currently homeless or at risk of losing their home in the next eight weeks. This also includes people living in very poor housing conditions, such as overcrowding, serious damp, or disrepair, or as a result of experiencing domestic abuse or other forms of violence; • Those whose residence is unfit for habitation; • Asylum seekers and refugees; and • Members of the Gypsy/Traveller communities staying on dedicated sites. In addition, Section 13 of the Visitor Levy (Scotland) Act exempts all individuals in receipt of the following UK disability benefits, payments, or allowances from paying the levy: • Disability Living Allowance Page 11
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• Disability Assistance • Attendance Allowance • Pension Age Disability Benefit • Personal Independence Payment. The cost of separate charged add-ons are not part of a levy, such as: • food • drink • parking • entertainment • leisure passes. Potential Argyll and Bute Council processes Individuals in the exemption categories may need to pay the levy and request reimbursement from Argyll and Bute Council. Reimbursement can be applied for online, submitting receipts for their overnight stay, relevant evidence (as will be detailed on the council’s website) of their exemption/exclusion and bank details. For those in receipt of the UK disability benefits, payments or allowances detailed above, evidence will be required to be submitted online and should include: • The name of person in receipt of relevant eligible benefit; • Alignment to the agreed Argyll and Bute Council VL Scheme; • A copy (scan/photo) of relevant benefit award letter; • The name of the person in receipt of the relevant benefit should be included on the receipt or booking; • Proof of payment for overnight accommodation; and • Bank details (to enable payment via BACS). The council will assess the evidence received and pay the reimbursement via bank transfer if the applicant is found to be eligible. It should be noted that Argyll and Bute Council officers are still working on the exact processes that will need to be put in place and will require political approval in due course. 7. Scheme Strategic Objectives/Priorities and the Use of Funds The overarching aim of the VL Scheme is: To sustain Argyll and Bute's status as an area of outstanding natural beauty and heritage and to ensure that the impacts of a successful visitor economy are managed effectively and in support of the Argyll and Bute Council’s priorities and those highlighted in the Argyll and the Isles Strategic Tourism Partnership’s Tourism Strategy 2022-2025 (Argyll and Isles Strategic Tourism Partnership strategy). The VL Scheme objectives/priorities are aligned to the tweaked strategic Page 12
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priorities for the refreshed AISTP Tourism Strategy from 2025 onwards (as per paragraph 3.8 in the above report) as follows: 1. Extending the season and spreading visitors across the destination. 2. Reaching new audiences: marine and coastal tourism. 3. Sustaining and improving the offer. 4. The journey towards net zero. The Visitor Levy (Scotland) Act requires a local authority operating a VL Scheme to use the net proceeds of a scheme for certain specific purposes. Those purposes are that the funds must facilitate the achievement of the schemes objectives and that they should develop, support and sustain facilities and services for or used by visitors to a local authority area for leisure or business purposes. As per paragraph 3.9 in the above report the initial broad headings for investment opportunities enabled by the net levy proceeds are detailed in the table below, noting that these will need to be informed by the current pre- consultation consultation and engagement activities currently underway. Proposed Investment Opportunities – Short to Longer Term Strategic priorities Extending the Season and spreading visitors across the destination Reaching new audiences: marine and coastal tourism Sustaining and improving the offer The journey towards net zero Overarching focus Flexible regional marketing activity to promote hero products where there is ambition and capacity. Flexible sector- led marketing and product development to attract key international and cultural visitors. Continuous investment in the development of destinations, places, people and visitors experience. Investing in and encouraging businesses and visitors to enjoy the destination in more sustainable ways. Related activity Sustaining existing and creating new infrastructure and event spaces. Improving step ashore facilities. Inter-island and destination connectivity. Realistic transport options. Business development: • digital capability • training and skills (employer and employee) • new product development. Supporting businesses with adopting net zero practices to drive efficiencies. Deliver transport infrastructure (including active travel) and services that support transition to low carbon journeys for visitors, business staff and residents. Argyll and Bute Council will make the final decisions on the use of funds taking into consideration the findings from all pre-consultation activity and the main 12- week consultation. Page 13
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8. Annual reporting, reviewing and changing the VL scheme Annual Report Within the first 18 months from when the Argyll and Bute Council VL Scheme comes into force, and for each 12-month period following this, Argyll and Bute Council must prepare an annual report setting out: • The amount of money collected • How the net proceeds have been used; and • The performance of the VL Scheme in relation to its objectives. Formal VL Scheme Review The first review must be carried out within three years of a VL Scheme coming into force. Second and subsequent reviews must be carried out within three years of the previous reviews. These reviews will assess whether the scheme is successfully achieving its objectives and measure the impact of the scheme on businesses and communities. The review will be reported, along with detail on how the income has been spent and the benefits which the VL-funded projects have brought. VL Scheme Changes If the council wants to make changes to the scheme following the review, it will publicly consult on the change and publish a report detailing the decision and its justification. Significant changes to the Argyll and Bute Council VL Scheme will require an 18-month implementation period. Significant changes to the scheme include: • increasing the VL percentage rate; and/or • removing any exemptions. 9. Visitor Levy Forum (VL Forum) Further to the establishment of the initial VL Shadow Forum, small advisory group at the pre-consultation stage, a VL Forum will be set up by the council within six months of the Argyll and Bute Council formal announcement that a VL will be introduced (post the 12-week consultation period). The VL Forum will act as an advisory board to discuss and advise on the VL scheme, including any proposed modifications. The VL Forum will also be consulted on how the VL funds will be spent. The VL Forum will be made up of representatives from the community and from businesses in the visitor economy. It should be noted that the VL Forum has no capacity to make any decisions. All decisions can only be made by Argyll and Bute Council elected members. Page 14
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Appendix 2: Draft Impact Assessment: Argyll and Bute Council VL Scheme Overview This impact assessment evaluates the potential consequences of Argyll and Bute Council’s draft VL Scheme as outlined in the VL (Scotland) Act 2024. The levy will apply to overnight accommodation across various categories in the region and is designed to generate revenue for sustainable tourism development while addressing community needs. This assessment covers the impacts on key stakeholders, including businesses collecting and remitting the levy, visitors paying the levy, local communities, including island communities, the local authority administering the scheme and an overarching equalities impact assessment. A. Impact on Businesses Collecting and Remitting the Levy 1. Administrative Burden: • Accommodation providers will be required to collect a 5% levy (working figure at present) and submit quarterly returns via a national online portal (all to be confirmed). This introduces an additional administrative burden, particularly for small businesses that may not have the resources to handle such tasks efficiently. • Record-keeping requirements and potential inspections will increase operational complexity, especially for providers unfamiliar with such regulatory obligations. 2. Financial Impacts: • Businesses with low profit margins may experience challenges incorporating the levy collection process without passing costs onto consumers. Some operators may need to invest in updated software or processes to handle reporting and compliance. • Non-compliance penalties could pose a financial risk to smaller providers, especially if the required training or systems for levy collection are unclear. • The HMRC position is that the levy collection is treated as income for VAT purposes. Requiring small businesses to collect and remit the visitor levy may inadvertently push those close to the VAT threshold over the limit, thereby triggering mandatory VAT registration and the associated administrative and financial burdens. This added obligation could increase operational complexity for small businesses, which may face higher administrative costs and potential price increases that impact competitiveness in price-sensitive sectors. The lack of specific reliefs or exemptions for businesses affected in this way may exacerbate these challenges, underscoring the need for careful policy consideration to mitigate unintended impacts on small enterprises. It is proposed by industry representatives on the Shadow VL Forum that industry Page 15
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liaises with the Scottish Tourism Alliance to lobby the HMRC on their behalf on this issue. 3. Economic Effect: • The levy may lead to higher accommodation prices, potentially affecting demand, particularly among cost-sensitive customers. This could have knock-on effects on occupancy rates, especially during off-peak seasons. • However, businesses located in less-visited areas may benefit from the levy’s objective to spread visitor traffic across the region, potentially increasing bookings in those areas. • A number of tourism businesses may decide to close their operation prior to the introduction of the levy reducing capacity across Argyll and Bute. B. Impact on Visitors Paying the Levy 1. Visitor Perception: • Visitors may view the levy as an additional cost, potentially influencing their decision to stay in Argyll and Bute compared to other regions without such levies. This could especially deter budget-conscious travellers or those staying for longer periods. • Transparency together with clear communication concerning the levy’s purpose and the tangible benefits it will bring to the visitor experience, such as improved infrastructure and environmental initiatives, will be crucial in mitigating any negative perception. 2. Visitor Demographics: • High-end and eco-conscious tourists may be more accepting of the levy, as it aligns with responsible and sustainable tourism goals. Conversely, visitors relying on budget accommodation (e.g., campers, hostels) may feel a disproportionate impact, as the percentage-based levy could result in significant additional costs over longer stays. 3. Visitor Experience: • The revenue generated will be used to enhance the visitor experience through improved infrastructure (e.g. campervan pitches, public toilets, signage) culture and heritage including events, which may help justify the additional cost (see section 7 of the VL Scheme for more details). If visitors perceive these enhancements positively, the levy may have a neutral or even positive long-term impact on visitor satisfaction. C. Impact on Communities who may Benefit from the Levy 1. Economic and Social Benefits: • Local communities are likely to see benefits from the levy, including funding for infrastructure improvements, public realm upgrades, and Page 16
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enhanced cultural and recreational facilities (see section 7 of the VL Scheme for more details). These investments will support both the visitor economy and residents' quality of life, contributing to local job creation and enhanced services. • Extending the tourism season and promoting less-visited areas can spread economic benefits more evenly across the region, reducing pressure on popular spots and allowing smaller communities to tap into the tourism economy. 2. Environmental and Cultural Preservation: • The focus on environmental sustainability and supporting initiatives like net-zero projects and responsible tourism will help protect Argyll and Bute’s natural and cultural heritage. Local communities, particularly in rural and coastal areas, will benefit from initiatives to manage visitor impacts, such as improved waste management and protection of fragile ecosystems. 3. Community Involvement: • The establishment of the Shadow and then main Visitor Levy Forum, which includes (and will include) representatives from local businesses and communities, provides an avenue for stakeholders to voice their concerns and influence how funds are allocated. This participatory approach can foster community buy-in and help ensure that projects funded by the levy address both visitor and local resident needs. D. Impact on Local Authorities Administering the Levy 1. Administrative Burden: • Argyll and Bute Council will face new responsibilities in terms of managing the levy, including processing returns, conducting compliance inspections, managing appeals, and distributing funds. These tasks will require dedicated resources and staff training. • The council will also need to ensure that the national online portal (if this option is taken forward) operates smoothly and provides clear instructions and training workshops/webinars for accommodation providers. Any technical issues or miscommunications could result in compliance problems and reduce the effectiveness of the scheme. 2. Revenue Generation: • The council expects to raise circa £9 million in gross revenue annually, which will be used to fund a wide range of local projects related to tourism infrastructure, culture and heritage, environmental sustainability, and community support (see section 7 of the VL Scheme for more details). This new revenue stream will reduce the financial strain on existing council budgets and enable longer-term investments in the region’s tourism sector. Page 17
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• Argyll and Bute Council will need to carefully manage the costs of administering the scheme to ensure that net revenue is maximised. Monitoring compliance, managing appeals, and processing reimbursements for exempt individuals will add to the overall complexity and cost of administering the scheme. 3. Policy Review and Adaptation: • The council will review the scheme every three years, assessing its success in meeting objectives and making adjustments as necessary. This ensures that the levy remains responsive to changing conditions in the tourism sector and local economy. However, regular reviews may require additional administrative resources and consultation processes. E. Impact on Island Communities 1. Economic Sustainability and Visitor Distribution: • Island communities within Argyll and Bute may experience unique economic challenges and benefits from the levy. While the additional revenue has the potential to enhance local infrastructure, support services, and sustainable tourism initiatives, there is also a risk that the levy may impact visitor numbers to these areas, particularly for cost- sensitive travellers. If visitor demand decreases, smaller island businesses could face a disproportionate economic impact compared to mainland operators. Strategic reinvestment of levy funds to support island-specific tourism and transport infrastructure will be essential to ensuring that these communities benefit from increased visitation rather than reduced demand. 2. Increased Costs and Infrastructure Strain: • Due to their limited resources and higher operational costs, island businesses may face greater challenges in meeting levy collection requirements. Transporting supplies and addressing waste management are often costlier for island communities, so visitor levies should ideally support these unique needs, addressing infrastructure and services that directly impact both residents and visitors. This could include enhanced ferry services, improved access to emergency services, waste management solutions, and upgrades to basic visitor facilities, which are critical to sustaining both the tourism industry and local quality of life. 3. Cultural and Environmental Preservation: • Island communities are home to sensitive ecosystems and cultural heritage sites that are highly vulnerable to the pressures of tourism. The levy offers an opportunity to direct resources towards the preservation of these assets, such as coastal ecosystems, local wildlife, historic sites, and island-specific cultural practices. Prioritising projects that protect the environmental integrity and cultural heritage of these communities will foster sustainable tourism while safeguarding local traditions and the natural landscape for future generations. Page 18
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4. Community Engagement and Fair Distribution of Fund: • Engaging island residents for consideration as members of the Visitor Levy Forum and ensuring equitable fund allocation to island projects are essential for maintaining community support and maximising the levy’s positive impact on these areas. Establishing specific channels for island representatives to influence decision-making will help align the levy’s revenue usage with the unique needs and priorities of these communities, fostering greater community buy-in and promoting projects that reflect both visitor and resident interest. F. Equalities Impact Assessment – this is currently being prepared and will be shared in due course. Conclusion The VL Scheme for Argyll and Bute has the potential to generate significant benefits for the local economy, community aspirations, culture and heritage, and tourism infrastructure while promoting sustainable tourism practices. However, the VL Scheme introduces new administrative burdens for both businesses and the council, with particular challenges for island communities that face unique economic and infrastructure constraints. Effective communication, transparent, user-friendly systems, and a clear demonstration of how the levy benefits both visitors and residents will be crucial in ensuring the scheme’s success. Ensuring the fair allocation of funds to address the distinct needs of island communities, alongside proactive monitoring and adjustments to the scheme, will be essential to mitigate any negative impacts on tourism businesses, communities, and visitor experiences throughout the region. Page 19
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