Chamber and committees

At this stage, my view is that it would be for Parliament to determine whether a flat-rate model or a percentage-rate model is applied.

Again, I do not want to rule out any particular position. I am open to hearing views, because I recognise that there is a range of them. A compromise position would potentially be to allow local authorities to determine that themselves, but I am conscious that there might well be a view from industry that that would just add further complexity. One of the motives for having a flat rate is the complexity that is involved in administrating a percentage rate, particularly for smaller operators. If we had a set of circumstances whereby there was variation between local authorities, with some applying a flat rate and others applying a percentage, that would not address the issue of complexity.

The levy would need to be applied in a way that is consistent with the new deal for business and the new deal with local government. I would want to explore the issue in further detail to understand what the views are of local authorities and businesses. I recognise that industry is leaning towards a flat rate and that local authorities’ views are mixed.

My view is that what we settle on in the legislation will ultimately be a matter for Parliament to determine. At this point, from my perspective, Parliament should seek consistency: it should be either a flat rate or a percentage rate.

I do not want to pre-empt further discussions with colleagues in local government to understand what their views are. The scheme in the bill has the stated objective of simplifying administration. However, I am conscious that, were we to change what is in the bill—that is, move from a percentage rate to a flat rate—that objective could be undermined by taking an approach that further complicates things. Such complexity might be as a result of local discretion or the unintended consequences of having a tiered system of flat rates, which could help to address some of the issues to do with it being a less progressive approach than a percentage rate, but could also further complicate matters.

I appreciate that there is a lot of complexity in that answer. I am very keen to hear the considered reflections of the committee in its report, and I will be engaging further with the sector and local government ahead of the stage 1 debate and stage 2.

Revenue that is raised through a visitor levy is not intended to substitute for any other revenue. The revenue that will be raised is to be hypothecated for spend on facilities and services that help and support the visitor economy. That is clearly defined in the legislation. Local authorities have to account for the income separately, they have to publish a report and they have to review the scheme after three years.

Prior to the introduction of a scheme, there is a requirement to set out the proposed scheme’s objectives. The objectives must be consistent with the definition in the bill of supporting the visitor economy. That is clearly set out. If there are particular concerns around the specific wording or the definition that is used by industry, I would want to have discussion and engagement to ensure that there is clarity.

We have sought to be very clear in the bill that revenue that will be raised from the visitor levy is to be accounted for separately, that there must be transparency about how it is spent in terms of intention and reporting, and that decisions on how a scheme is developed—that is, what the specific local objectives will be—will be determined by the local authority through engagement and consultation of accommodation providers, destination management organisations, businesses and communities in their area.

If there are specific concerns around the wording, I am more than happy to hear those, but the clear policy intent is that the revenue will be used to support the visitor economy. That is of paramount importance to me.

Equally, we need to ensure that there is a balance between giving confidence and certainty and recognising the degree of flexibility that is required so that local authorities can respond to the assets and needs of their particular areas.

Again, if there are concerns about any specific aspect of the wording, I am more than happy to have engagement on that to ensure that we have wording that commands the confidence of local government and business.

I recognise the points that have been raised. Clearly, VAT is a reserved tax. At the introduction of the bill, I wrote to the UK Government, which has responded to set out its views, and we have shared that correspondence with the committee. Given that the levy will be locally administered, local authorities that are considering introducing a visitor levy will have to take the VAT issue into account. The bill sets out a requirement to consider the impact of introducing a visitor levy, so local authorities will have to consider that carefully.

That speaks to the importance of the process of consultation and engagement that is required to precede the introduction of a visitor levy. It is a fair and legitimate point that has been raised. Should the bill be passed, it will be for local authorities that are considering introducing a levy to take that into account in their decision making.

First, local authorities routinely consult and engage on a number of issues, and they are best placed to determine how that process is carried out. The levy would be a local government scheme operating within legislation that is determined by Parliament. Ultimately, I imagine that Parliament will take an interest in how it is operating and that future committees will want to explore post-legislative scrutiny of that.

With regard to it being a local power, as I have set out before, there is transparency in the various requirements around consultation and reporting. I imagine that consideration will be given, in particular, to what the stated scheme objectives are for the deployment of revenue generated from a visitor levy, to whether those objectives are met and, if they are met, to what degree. As I touched on earlier, that will inform future iterations of the visitor levy, should a local authority seek to continue it. I imagine that, following the introduction of the levy, business and communities will expect there to be keen interest in continued engagement with local government. Those are obviously matters for individual councils to consider in a way that is consistent with the legislation. However, for that to be a success, it will require collaboration and partnership working, which are inherent in the requirement to consult and engage. From my engagement with local authorities that have expressed an interest in taking forward the visitor levy, I know that there is a strong desire to work in partnership with the communities and businesses that they represent, to ensure that it can be a success.

However, the important thing is to set out clearly, through consultation, what the scheme’s objectives are. Reporting on that will give important data to evaluate and measure specific objectives. Clearly, in addition, over the medium to longer term, further work can be undertaken on the economic impact and analysis can be done of whether those interventions and objectives have proven successful in enhancing the performance of the visitor economy in a particular area. Those matters will be for local authorities to determine, just as all governments routinely review their broader suite of policies.

To be clear, a public consultation will be required. If we make quick progress—depending on the parliamentary timetable for the bill—there might be an opportunity for amendments. However, I do not want to unduly rush the development of a cruise levy proposal, and I would not want it to have any impact on the projected timescales for the eventual legislation.

I think that we both recognise that particular circumstances can arise. However, we are jointly committed to the values that underpin the Verity house agreement, and we want to operate and work in a way—jointly and in partnership—that is consistent with the approach set out in it. That is how we will seek to continue to build on the progress that has already been made, in short order, since the agreement was reached.

There is a shared recognition of the inherently regressive nature of the council tax overall. The council tax freeze will benefit everyone who pays council tax. We can understand that the council tax might well represent a higher proportion of their income of those who are on lower incomes.

In our role as representatives of our constituencies and regions, we all recognise that there is no part of society or of the people whom we have been elected to serve that has not been touched significantly by the impact of the cost of living crisis. That has certainly been reflected in conversations that I have had with people who are working in advice and money advice services, for example.

The council tax freeze can give people certainty at a time when we see significant fiscal pressure arising from the cost of living. I know that the policy will be welcomed by households across Scotland for providing that certainty going into the next financial year.

Yes, I am. As I have said, we recognise the views that have been expressed by local government. There is also a shared recognition of the opportunities that the partnership model that is embedded in the Verity house agreement affords local and national Government in taking forward shared priorities, including in the area of council tax reform, which I know is of keen interest to the committee, the Parliament more widely and, indeed, COSLA and individual local authorities.

We are very much committed to partnership working right across all aspects of the new deal with local government and specifically with regard to the council tax freeze. We are committed to ensuring that we can implement it in a way that meets the requirements set by the First Minister that it be fully funded and that it deliver a freeze that will be of benefit to people across Scotland.

The position on the determination of funding will be set out as part of the overall budget process and it will be considered in that context. I note that we will carefully analyse what is announced next week in the autumn statement, which will be key to setting the envelopes within which we will operate, as well as the forecasts from the Office for Budget Responsibility and the Scottish Fiscal Commission, which will set out the context for the fiscal environment in which we operate. We have given that commitment and we have set out the process by which we will arrive at a fully funded council tax freeze. The broader determinations around funding allocations will take place through the budget process. The Deputy First Minister will set out that position to Parliament next month.

Again, that is why we have committed to engaging with COSLA. I think that if I were to give a definition without having engaged with COSLA or without having had those discussions, that would be seen as presumptuous. That is why we have committed to the process of engagement, which we will undertake. That will provide the means by which we will determine what the quantum should be.