Bed tax woes

Bemused appears to be my default setting these days.  The older I get, the more the world puzzles and perplexes me.  I try to make it all add up and join together and too often, it doesn’t.

Take this wee story as an example.

In November, once the Edinburgh Festivals had put away their finery and counted up their money, they found that sales were down.  Never mind the puff pieces put out throughout the summer about “best years ever” and “ticket sales holding up”, the truth was rather more prosaic.  Only the Fringe and the Mela in Edinburgh recorded increases in attendances;  the International Festival, the Book Fest, the Jazz one and the Film Festival, marooned in its June berth, all recorded significant decreases in bums on seats.

The Festivals’ response?  To sit in their respective nests like fledging chicks with their anxious mouths agape.  We need more money they cried.  Feed us an additional £11.5 million.

At the time, I meant to blog on it.  They’re having a laugh would have been the general gist.  In a time of extreme financial pressures, when pensioners are choosing between food and fuel, when families are being kept awake at night wondering how to make their salaries stretch a whole month, here was a pampered section of our society sticking their hand out in a default reaction to a downturn in their fortunes.

When their initial response should have been how they were going to make efficiency savings – good enough for the rest of us after all, either as public services or private businesses or individual households – and how they were going to lever in funding from other sources.  Their own fundraising for years has been pretty poor, compared to other charitable enterprises in Scotland.  That’s what happens when you get big slices of public funding just to exist:  the urgency to find your own secure funding streams becomes less acute.

So, Edinburgh City Council, aware that when the music stops – as it might literally – they will be caught in the spotlight, determined to help the Festivals find alternative funding sources.  At last, it has realised that it cannot keep feeding this insatiable monster which primarily benefits visitors and them what does culture, at the expense of services to local and in particular, vulnerable and disadvantaged residents.  And lo, the idea of a tourist tax, touted and dismissed during the last budget consultation, was back on the agenda.  With uncharacteristic, some might say, undue haste, a proposal was put before and agreed by the Council.  Boo cried the tourist industry:  it might put people off coming here.  Aye right, the way it puts people off visiting New York or anywhere else that charges a supplement to tourists.

Yet, the Scottish Government apparently is not minded to provide the legislative powers the local authority might need to apply the tax, which would work as a small surcharge on every bed/room sold in Edinburgh.  Phew breathed the hotel industry, lauding the Scottish Government for “understanding the pressures the hotel sector is under at the moment”.

The Scottish Government, according to the Scotsman, is concerned that businesses already pay enough tax and that compared to other European cities, Edinburgh is disadvantaged thanks to the UK’s higher VAT level.  Aha, an opportunity to play a nationalist card and the government didn’t flinch!

On one level the Scottish Government is right – and let’s be clear they haven’t written off the idea completely, but simply said they have “no plans” and need to see “more detail” on how the scheme would work.  The high VAT level is an issue of fairness but I’m not sure it is doing anything to deter people from visiting the capital or indeed, Scotland.  The reasons for that are much more complex and more to do with financial pressures on their own countries and pockets.

And anyone who has ever tried to get a room in Edinburgh at any time will know how hard that can be.  Family friends tried to book a hotel at the end of September and failed, yet there was absolutely nothing going on that could account for them all being full.  There might be fewer tourists overall, but the stream is still steady, and they are largely higher-end tourists.  They come because they can afford to, so a pound a night bed tax is hardly likely to put them off.

As for the contention that businesses pay enough tax?  Yep, a lot of them do.  But some of the city’s biggest hotels are owned by multi-nationals whose domiciles will be in obscure Caribbean islands, minimising the amount of tax paid globally on their holdings and businesses.  The big hotel chains are just as wily at maxing the rules on their fabulously rich operations as others.

Moreover, the council is right to point out that hotels benefit hugely from all the publicly subsidised festival activity and actually put very little back.  Very few provide the sort of sponsorship other corporates do.  The tourist industry bodies want a voluntary levy scheme, yet when they have the chance to put their hands in their pockets right now, many fail to do so.

The Scottish Government’s stance is what is so bemusing.  Every penny of income that comes from a new or different source for luxury items like festivals and events must surely be a good thing in our current budgetary situation.  in the long term, we must find a way of weaning the festivals off their large public subsidies and divert that funding into activity that directly benefits all residents of Edinburgh and indeed Scotland.

To turn up their noses at a tourist tax proposal perplexes me, particularly when this is one income-generating measure it already has powers for.  No need for a punch up with Westminster on this one, so why the hesitation?

In times like these, we all need to do all we can to maximise income potential and minimise waste and inefficiency, thereby freeing up money for essential services for the most vulnerable, no?  That maxim should be everyone’s guiding principle for the next few years.  Festivals, tourism businesses, local authorities and governments alike.

3 thoughts on “Bed tax woes

  1. Pingback: Santa’s Sack of Scottish Blogging Goodness – Scottish Roundup

  2. There are so many bugs in the way our complete system of governance operates we need to rethink a better way of doing things.

  3. Soooo true! Seems its impossible to have a mature discussion about any business tax issue be it of the supermarket, corporate, bed or small business variety. The response of the Economy Committee when I recently suggested that the Small Business Bonus wasn’t delivering was apopletic.

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