Chamber and committees

I recognise the intent behind amendment 19 that, following each three-year review of a visitor levy scheme, a local authority should provide a clear indication of whether it wished to continue with or revoke the scheme. However, if the report included a decision that a scheme should expire, the amendment would require the scheme to expire as soon as the report was published. It would therefore remove the local authority’s discretion to revoke the scheme at a future date of its choosing, by requiring immediate expiry. That would give no advance notice and no time for modifications to the scheme to allow for a transition out of the scheme ahead of its expiry. Immediate expiry is likely to create administrative difficulties for accommodation providers if payments that have been collected from visitors in order to offset levies need to be reimbursed, and for local authorities in collecting unpaid levies.

The point that I made is that the local authority already has the power to exit a scheme if it chooses to do so, which is sufficient in that regard, rather than compelling it to have to consider doing so periodically. That is not something that it would do with other taxes, except on an exceptional basis.

That opportunity is already there, because local authorities can decide at that time, or indeed at any other time, to exit the scheme if they think that that is more suitable for their area, having taken input from local businesses and others, which they would constantly do.

I ask Mr Kerr not to press amendment 19 and, if he presses it, I ask committee members to reject it.

Amendment 29 seeks to prevent local authorities from imposing a penalty where the basis for that penalty has arisen as a result of an accommodation provider relying in good faith on information from a third party. I understand the intention behind it, which is to protect accommodation providers who have acted in good faith, and I acknowledge Stephen Kerr’s comments about small businesses and microbusinesses having to operate the system and complete paperwork as appropriate. As someone who has run small businesses, I am well aware of the challenges that that presents, and, throughout the process, we have worked hard to listen to industry and to make the tax as easy to operate as possible by taking input from the sector. However, with regard to amendment 29, I do not consider the proposed change to be necessary.

Section 46 of the 2024 act already provides local authorities with proportionate enforcement powers. There are existing safeguards that mean that penalties will not apply where a liable person has a reasonable excuse for a failure to comply. The act provides that reliance on another person is not generally a reasonable excuse, but it can be, if the liable person took reasonable care to avoid the failure. Therefore, I believe that amendment 29 is not necessary to achieve the member’s intention.

By introducing a broad statutory defence, amendment 29 could significantly restrict enforcement action in practice. It could make penalties more difficult to apply and require authorities to resolve disputes about what constitutes good-faith reliance before taking action. Existing safeguards, including review and appeal rights, already protect providers from unfair or disproportionate penalties.

I therefore urge Stephen Kerr not to press amendment 29, and if it is pressed, I urge committee members to reject it.

Will Stephen Kerr give way?

Amendment 12, in the name of Stephen Kerr, would prevent a local authority from imposing a visitor levy

“if that levy would worsen geographic disadvantage felt by rural or island communities.”

Although I can appreciate that there are concerns about the potential impact on island or rural communities, amendment 12 does not help to address them; it creates only uncertainty for authorities in deciding whether they can apply a levy in those areas.

I have nothing to add, convener.

Amendment 4 agreed to.

Amendment 5 will confer on the Scottish ministers a regulation-making power to allow for the amendment of the visitor levy returns that are submitted to local authorities by accommodation providers. The returns assess the amount of levy that is to be paid to local authorities.

As committee members may recall, earlier this year, regulations were laid under section 45 of the 2024 act that set out the process by which a local authority may make or substitute an assessment where the authority has reason to believe that a return should have been made but has not been, or where a return made

“is incorrect by reason of careless or deliberate miscalculation.”

The 2024 act contains no similar provision to allow a process to be established for a liable person to amend a return made by them when they discover an error after the return has been submitted, and that error was not deliberate or careless. The new power will allow for a consistent process to be established for the amendment and correction of returns, whether at the request of the accommodation provider or on the initiative of a local authority. Draft regulations will need to be approved by the Parliament before they can be made.

Amendment 10 will correct a minor error in section 45(3) of the 2024 act. The effect of the provision is otherwise unchanged.

I ask committee members to agree to amendments 5 and 10.

I move amendment 5.

No.

Amendment 5 agreed to.

Section 4 agreed to.

After section 4

Amendment 6 moved—[Ivan McKee]—and agreed to.

Section 5 agreed to.

After section 5

This group of amendments seeks to modify section 19 of the Visitor Levy (Scotland) Act 2024. Section 19 requires net proceeds to be used to facilitate the achievement of scheme objectives, and when that is not needed, any surplus amount must be used for the purpose of

“developing, supporting and sustaining facilities and services which are substantially for or used by persons visiting … for leisure or business purposes (or both).”

That purpose captures many of the things that Stephen Kerr’s amendments seek to cover. To that extent, they are unnecessary. However, the amendments would also require any such surplus to be used for other purposes, too, that are not considered appropriate.

Amendment 14 would require the surplus proceeds to be spent on measures that reduce costs on tourism businesses. The current provision in section 19 already provides that net proceeds are to be used for purposes that are broad enough to cover the matters that are mentioned in proposed new sub-paragraph (ii) (A), (C) and (D) without the need for the amendment. The amendment would require the proceeds to be used for all the listed purposes, removing local discretion for authorities to apply funding where they consider it is most needed. In addition, “policing”, which is mentioned in proposed new sub-paragraph (ii) (B), is the responsibility of Police Scotland. Requiring local authorities to spend surplus net proceeds on any such policing matters would not be appropriate.

Amendment 15 would require authorities to spend net proceeds on measures that are related to mitigating the cost of regulating the tourism industry, but that includes costs that do not appear to relate to the operation of visitor levy schemes. In addition, it is unclear what is meant by

“enforcement measures targeting unfair competition within the tourism industry.”

The amendment would appear to require surplus net proceeds to be used for the purpose of mitigating the cost of any regulatory activity that is connected to the tourism industry, as it is not limited to costs that are attributable to local authority regulatory activity. I am not persuaded that that is necessary. In my view, it is sufficient that local authorities may use any surplus net proceeds for the purpose of

“developing, supporting and sustaining facilities and services which are substantially for or used by persons visiting”

the area of the local authority

“for leisure or business purposes”.

Amendment 16 would require local authorities to spend surplus net proceeds for the purpose of measures that offset costs and charges on the tourism industry. It is difficult to see how that could be achieved without the authority giving some form of financial assistance or compensation to businesses. In particular, any such surplus would be required to be used for the purpose of measures that offset licensing fees that are imposed on the tourism industry. That would undermine the policy intention behind their imposition, with licensing fees usually set on a cost recovery basis that does not generate revenue for the authority.

For those reasons, I urge members not to support amendments 14 to 16.

Amendment 17 would impose a duty on the Scottish ministers to put in place a process for reviewing visitor levy schemes, but only where a local authority is using the net proceeds for improper purposes. It is not clear what the effect of the review process would be.

The Visitor Levy (Scotland) Act 2024 already requires local authorities to use net proceeds for the purposes that are set out in section 19. It would not be lawful to use such proceeds for another purpose. Section 20 of the 2024 act requires an authority to publish annual reports on its visitor levy scheme. The reports must include information on the amount of money collected, how the net proceeds have been used and the performance of the scheme with reference to its objectives. That provides a regular opportunity for the authority to demonstrate propriety of spend. Section 21 of the 2024 act provides for three-year reviews by the local authority of the operation of a visitor levy scheme. The authority must publish a report of its findings. Taken together, these provisions already provide a robust monitoring and reporting mechanism. It is not clear how the additional review would enhance the existing processes.

There is also a critical role for the authority’s visitor levy forum, with the forum being consulted on how net proceeds from visitor levy scheme are used, annual reports and reviews of schemes, satisfying the interests of transparency.

Section 22 of the act also gives the Scottish ministers power to regulate the process to be followed by a local authority when introducing, administering, reporting on or reviewing a scheme.

For those reasons, I ask members not to support amendment 17.

Amendment 18 would require a local authority’s annual report on a visitor levy scheme to include information about how the scheme has impacted on visitor numbers, length of visitor stay and the viability of tourism businesses.

As I mentioned, section 20 of the 2024 act already requires a local authority to provide information in its annual report on the performance of the scheme by reference to the scheme objectives. Section 13 also requires the authority to consult in advance on how it intends to measure and report on the achievement of those objectives. Where it is relevant to the objectives, local authorities may include information in its annual report about the matters mentioned in the amendment, provided that that information is available and reliable.

Although I appreciate the intention behind amendment 18, it is not clear to me that the particular information sought will always to be relevant in relation to the objectives of a visitor levy scheme. I therefore ask members not to support it. However, I am happy to explore whether statutory guidance provided by VisitScotland for local authorities could be updated to include additional guidance on the content of annual reports.