Should Scotland introduce a tourist tax?

Should Scotland introduce a tourist tax?

The Institute of Chartered Accountants calls for a “robust public debate” on the topic

On 23 November 2018, the Scottish government published their ‘Tourist Tax: discussion document’, which addressed their intentions to discuss plans for the introduction of a tourist tax.

The Institute of Chartered Accountants of Scotland (ICAS) has warmed that the tourist tax plan needs to be “fit for purpose”. They have proposed a debate should take place on the topic.

“Our main concern with a tourist tax is that there are no unintended consequences,” said Justine Riccomini, head of taxation at ICAS.

“It is vital that such a tax does not deter tourists from visiting the country or become a barrier to [the] growth of Scottish business.

“The effect of a tourist tax on taxpayer behaviour should be thoroughly investigated, as should the effect of competition between cities and towns across Scotland, especially if a tax is levied by local authorities.”

As it stands

Riccomini outlined that, “[u]nder the Scotland Act 1998, the Scottish government can create new devolved taxes, subject to the overarching consent of Westminster.”

As well as the potential for a tourist tax, the Scottish government is looking into a tax on vacant land and a tax on disposable plastics.

ICAS has now released their full statement responding to the Scottish government’s proposal.

What does the ICAS report say?

From the outset of their report, ICAS has made it clear that they have decided to restrict their comments to “general comments and to matters relating to taxation policy, rather than addressing the specific questions in the document.”

The accounting body highlighted eight key areas which they have argued are vital components of the Scottish government’s consideration of the implementation of a tourist tax:

  • Authority
  • Objectives
  • Responsibility
  • Rationale
  • Revenue
  • Locus
  • Potential undesirable effects
  • Practical administrative issues

The report continued: “With local tax raising, it may open up the possibility that such taxes create a cycle of funding inequalities between local authorities that increases over time—i.e. those local authorities with, say, strong tourist demand would be able to raise most revenue from a levy, which in turn enables them to strengthen the tourist offering further.”


The success of hypothecation will be dependent on the basis of whether there will be greater acceptance if these taxes are raised for a specific – more importantly, a popular – purpose.

“More broadly, in terms of public policy regarding the levying of taxes, care needs to be taken, and there should be a full public debate, before this path is followed,” the ICAS report stated.

“Hypothecation implies that the taxpayer is simply paying for a particular item of service. Following this logic, taxpayers should only pay for what they use, which undermines the notion of contributing to the common good. If taxation is levied for the common good, all funds should be collected together and then decisions made about their use.

“Hypothecation also limits flexibility for government policymakers.”

The risk of behavioural change

One of the main causes for concern surrounding the potential tourist tax would be the impact this could have on the tourist industry that some areas of Scotland rely on, as it is a substantial part of their economy.

Whether or not this behavioural change is for the worse or better very much depends on whether this restriction on the tourist industry would be purposeful or an unfortunate consequence.

The accounting body concluded: “ICAS welcomes the opportunity to participate in further discussion as [the] Scottish government’s policy develops.”

The full ICAS report can be found here.


Do you think a tourist tax would be beneficial to Scotland? Or do you foresee issues that ICAS have not covered in their reply.

Contact us on Twitter to share your thoughts: @AccountancyAge

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