The Role of a Visitor Levy in German Cities and How It Differs From the Scottish Debate

In a significant move for Scotland's tourism sector, the Shetland Islands Council has decided against implementing a visitor levy, also known as a tourist tax. After a comprehensive feasibility study, the council concluded that the risks associated with the tax, including administrative burdens on small businesses and the potential for a negative impact on visitor numbers, outweigh the projected benefits. This decision places Shetland in contrast to other major Scottish cities like Edinburgh and Glasgow, which have voted to adopt a similar levy. The council's choice was largely driven by its unique economic context and the high cost of travel to the islands, a factor that officials believe makes an additional tax on visitors untenable.

The debate over the visitor levy in Shetland was a detailed one, reflecting the deep concerns of both local government and the tourism industry. A report presented to councillors found that even with a five per cent levy, the tax was projected to generate less than £1 million over a 10 year period, a sum deemed insufficient to justify the potential drawbacks. The council's leader, Emma Macdonald, stated that a visitor levy "just isn't the answer, and doesn't make sense in our context," suggesting that a one size fits all approach to tourism levies across Scotland is not appropriate. The council is now focusing on engaging with the Scottish government on alternative revenue raising models, such as a cruise ship levy or a point of entry fee, which are seen as potentially more favorable given the high volume of cruise passengers visiting the islands.

The decision has been met with praise from the Shetland Tourism Association and local businesses. They argued that the administrative burden of collecting the tax would be disproportionately high for the small and micro businesses that dominate the islands' accommodation sector. The cost of getting to Shetland, already significant due to high ferry and flight prices, was also a major point of contention. Industry representatives warned that an additional tax could make the islands an unaffordable destination for tourists, particularly those traveling from other parts of the UK. The council's vote is a clear signal that it prioritizes protecting the local tourism economy and a belief that the proposed tax would not have been a viable solution for the region's specific challenges.

The outcome in Shetland highlights the broader debate about tourism taxes in Europe, where the approach varies significantly from country to country. While many major cities, including those in Germany, have successfully implemented visitor levies, their success often depends on a high volume of visitors and a strong administrative infrastructure. In Germany, cities like Berlin and Cologne levy a "city tax" on overnight stays, with the revenue often used to fund local cultural and tourism projects. The German model is typically a low flat fee or a small percentage of the accommodation cost, and it has become a widely accepted part of the travel experience. However, the Shetland council's decision suggests that a model that works for a high volume city like Berlin may not be a good fit for a remote island archipelago with a different tourism profile.