Edinburgh tourist tax: Revenue could help fund cycle hire scheme, park upgrades and even tram extensions

A new cycle hire scheme, improvements to city parks and even tram extensions could all be among projects to receive funding from Edinburgh’s tourist tax, council leader Cammy Day has said.

Edinburgh is expected to become the first city in the UK to introduce a Visitor Levy once the Scottish Parliament passes legislation giving local authorities the power to do so. And council chiefs in the Capital are already in talks with the tourism sector on how the new tax will operate. There is no official proposal yet on how much the tax will be, but Cllr Day has previously suggested it could be 4 per cent on the price of a room. Today he said: “I think a rate of between 3 and 5 per cent would not be unreasonable.”

According to a report to the council’s policy and sustainability committee next week, a 3 per cent tax would raise £16.8m per year, a 4 per cent tax would bring in £22.4m per year and a 5 per cent tax would mean revenue of £28m per year.

The Visitor Levy (Scotland) Bill, which was published in May and is currently out to consultation, says that the revenue raised will have to be reinvested locally on "facilities and services substantially for or used by persons visiting the area of the local authority for leisure purposes”. The council argues the wording is too restrictive and hopes it will be amended to make it clearer that the money raised can be spent to benefit the city as a whole as well as tourists. It also argues the current wording ignores the importance of business tourism in the Edinburgh economy.

Cllr Day said: “I know the industry are a wee bit nervous about 'Is it just for potholes?' Absolutely not.” He said he wanted to use the money for the responsible growth of tourism and investing in the infrastructure around that; promoting culture and tourism in the city to make sure Edinburgh retained its “Festivals capital of the world” status; and benefiting the wider city.

Keeping Capital clean during tourist season costs £1 million

And he offered examples of activities that might be funded from the tourist tax revenue. He said: “It costs us £1 million extra to pick up waste and keep the city tidy during the key tourist period, so that would be something we'd look at.”

He pointed to the council’s aim of spreading the Festival beyond the city centre to other parts of the Capital. “We use Pilrig Park, for example, for Festival events, so would we invest some of the money to upgrade Pilrig Park? It's a cultural venue, but also the people of Leith would get an upgraded park for the rest of the year.”

On a cycle hire scheme to replace the one which collapsed in 2021, Cllr Day said: "It would help people in the city get around, which is why we had it in the first place, but also lets tourists get around the city."

He said Nottingham had used money from its Workplace Parking Levy to invest in two tram extensions. “Arguably if we are trying to spread the Festival to other parts of the city and trying to provide the best travel for people who live in the city and those who visit, then could something like that be considered?”

Tourism sector and Edinburgh communities will advise on spending

And funding road improvements from the tourist tax is not entirely ruled out. “It's absolutely not about raiding a tourist levy to go round every pothole in the city to fill it in,” he said. “But if it's part of a project that benefits the offer to the city and tourists then yes. If that means roads are being fixed as part of a project to promote active travel for the city and tourism, then it might well be."

The report to committee says the council will set up a Visitor Levy advisory group, with membership from across the tourism, culture and leisure industry, as well as residents and community groups, to oversee the development and delivery of a Visitor Levy investment plan.

Cllr Day said: “We're working already with the industry. But ultimately, as the Minister told us in the discussions we've had, the decision about what rate we set it at and what we spend it on is a decision for the council.”

The current timetable for the introduction of a Visitor Levy would not see it implemented before April 2026, but Cllr Day is eager to see the process speeded up. After the legislation gets royal assent, the Bill as it stands requires the council to carry out another consultation, followed by an 18-month implementation period before the levy can be collected. Other cities around the world have implemented a similar tax in around six months.

Cllr Day said: "Six months is enough time to get that done. Given the city has talked about this for a decade or more, the sector are now working with us, they know it's coming, another 18 months on top of this is excessive."