If a US city gets greedy, taxing visitors at too high a
level, planners will simply take their business elsewhere
Reservation Summary
26 Nov 2015 – 27 Nov 2015
1 room for 1 adult
1 KING BED
Price: 249.00
Taxes: 47.31
Room Subtotal:
Total for stay:
planners and buyers will simply take
their footloose business to a
lower-taxed destination.
Hotels and restaurants that operate
in a Transient Visitor Tax operating
community are required, by law, to add
the appropriate percentage tax to their
customers’ bills before passing it on -
usually retaining a 10% administration
fee - to their respective town/city
councils, according to the terms of
Interlocal Agreement legislation,
which specify exactly what the tax
revenues can (only) be used for, as
shown in the sample Canadian hotel
bill above.
Hypothecated taxation is found in
many other parts of the world.
Barbados is now considering a Bed Tax
along with a 2.5% Airline Travel and
Tourism Development Tax on
international air fares and other ‘direct
tourism services’, such as car hire; and
New Zealand is evaluating the
introduction of an Entry Tax for
‘transient visitors’ from 2019 onwards.
Hawaii has also recently introduced
a 1% increase in its Transient
296.31
$296.31 CAD
Accommodation Tax, bringing the rate
up to a hefty 10.25%, to help finance
Honolulu’s new rapid transit system,
and Bali also adds a 10% Local
Development Tax on all hotel and
restaurant bills.
Above:
Life’s only certainties:
death and taxes...
UK
Many UK local authorities like the idea
of transient visitor taxation and are
attracted by the much-needed funds it
can generate, especially as the tax isn’t
paid by local residents or local
businesses.
For instance, Oxford City Council
has been arguing to be given the power
to develop a local tourism tax, linking
it to Brexit, and saying that “…the
devolution of power to local authorities
to impose tourist taxes may be well
worth fighting for, at a time of
post-Brexit uncertainty and public
spending cuts”.
Other UK authorities that are
considering the introduction of a
tourist/visitor/bed tax include
Camden, Westminster, Bath,
Birmingham, Brighton, Cornwall and
ISSUE 99
Cover story
Edinburgh, which is exploring the
introduction a ‘flat rate’ levy of either
2%, or £2 per night, per hotel room or
Airbnb-style short-term let and calling
for a ‘national, rather than local’
debate.
But, the UK has a very centralised
taxation system, with income and
expenditures defined and controlled by
HM Treasury, an organisation that
does not favour any form of
locally-determined taxation. So only
time will tell whether these initiatives
will mature.
A recent poll in Edinburgh showed
85% per cent of respondents, including
a majority of the city’s businesses and
accommodation providers, in favour of
introducing a transient visitor levy
(TVL), or tourist tax and the council
estimated the proposed scheme could
raise between £11.6m and £14.6m per
year for the city, although some
business groups have warned it could
have an impact on other revenue from
tourism.
The scheme had extremely high
support among residents, with 91% in
favour, while only just over half – 51%
– of accommodation providers who
responded to the consultation were
behind it.
However, nearly three-quarters of
respondents (72%) agreed with City of
Edinburgh Council’s proposed rate of
£2 a night or 2% of the cost of
accommodation, while another 19% felt
this was too low.
But, not everyone is behind
Edinburgh’s proposed transient visitor
tax and the leaders of the city’s hotel
and hospitality sector have voiced their
opposition to any form of tourist tax,
claiming that it would damage the
city’s tourism and hospitality sector.
Writing in The Scotsman newspaper,
John Donnelly, Marketing Edinburgh’s
chief executive, said: “More people
coming to the city is brilliant news for
our economy – but it puts increased
pressure on our ability to service them.
“So, how can we secure sustainable
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