Edinburgh ‘tourist tax’ to be set at 5%

Edinburgh city council leader Jane Meagher said she believes the tax will bring “huge benefits” to the city but won’t be a “silver bullet” for problems with housing.

She also denied that the tax would put off visitors.

Meagher added: “People understand the need for a visitor levy, because inevitably people coming to the city use resources that are currently paid for through council tax.

“They understand the logic of it, but most importantly get the benefits of it – they’ll have a better experience coming to the city.”

The fee would be a percentage of the cost of overnight accommodation – minus commission the provider pays to any online booking service and room “add-ons” like food and drink.

Leon Thompson, executive director of the trade body UKHospitality Scotland, said it was “crucial” that the levy was not raised above 5%, but that “clear and detailed guidance” was needed to help businesses implement the tax.

He said: “It’s positive that the council has listened to strong feedback from hospitality businesses on this point.

“I would urge councillors to understand that the rate cannot be punitive and to be mindful of the impact any additional costs will have on businesses and visitors.”

In 2023 a housing emergency was declared in Edinburgh, due to soaring house prices and rental rates, as well as a record number of people identifying as being homeless.

Tourists contribute an estimated 5.3 million overnight stays to the city every year, but already expensive room rates soar in price during the August festival season – leading some comedians and performers to say they were being priced out of attending.

A number of other Scottish local authorities have expressed interest in a tourist tax, saying they do not have enough facilities to cope with escalating numbers of visitors.