A decision on Aberdeen’s proposed 7% tourist tax is imminent, with councillors set to cast their votes next Wednesday [August 6]. The potential levy, the highest currently suggested in Scotland, could add about £5 per night to hotel bills and is expected to generate up to £7.5 million per year for city improvements and future events.
The proposal comes in the wake of the Tall Ships Races, which returned to Aberdeen for the first time in 28 years and drew over 400,000 visits. The event delivered a remarkable 37.8% increase in city centre footfall.
Officials and supporters of the levy point to events like the Tall Ships as proof of Aberdeen’s potential to host world-class gatherings if more funding is available.
Alex McLellan, convener of the council’s finance committee, said: “You’re talking about the price of a coffee… which could really boost the local economy in Aberdeen. The visitor levy offers a real opportunity for the council to generate additional revenue, which can be used to boost the visitor economy, bring people here, bring major events here, and really put Aberdeen on the map as a destination in Scotland.”
Industry anxiety over Europe’s highest rate
Despite the success of recent events, business leaders have criticised the proposed 7% rate, which outstrips similar levies in other Scottish cities and is among the highest in Europe.
Mike Duncan, development manager for the Federation of Small Businesses, has warned: “A 7% levy would be the most expensive so far proposed in Scotland and one of the very highest in Europe. Apart from the cost, Aberdeen must consider the perception this will create among potential visitors and whether it risks deterring them altogether.” He added that other cities, such as Glasgow and Edinburgh, are opting for a 5% rate.
Fiona Campbell, CEO of the Association of Scotland’s Self-Caterers, previously highlighted another complication, saying: “A punitive rate of 7% would be more than that envisaged by other cities like Glasgow or Edinburgh. Moreover, it is important to understand this is a tax on a tax: the 7% levy itself would be subject to 20% VAT, something unheard of in Europe. Other destinations have a reduced rate of VAT on tourism services, where Scotland does not.”
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David Weston, representing the Scottish Bed and Breakfast Association, raised further concerns: “I’m shocked, because Aberdeen is not facing issues of over-tourism. They are neglecting the potential risks to tourism and the negative consequences it could have on Aberdeen, which would resonate throughout the entire economy.”
If approved, the levy would apply to all overnight accommodation, including hotels, B&Bs, hostels, and self-catering lets. Exemptions are being considered for homeless residents, asylum seekers, those on disability payments, and people in Aberdeen for medical reasons.
Raised funds might be directed towards major regeneration projects, city centre events, and infrastructure – priorities reinforced by the economic upswing attributed to the Tall Ships Races.
