Call for new tourist tax

Professor presses for hotel levy as part of shake-up of local taxation

COUNCILS should be given powers to levy tourists on hotel visits as part of the overhaul of local taxation, according to Scotland’s leading academic expert on local government.

Professor Richard Kerley has also urged the Commission on Local Tax Reform to hand local authorities control over business rates, claiming that in private, politicians of all parties accept the current council tax freeze is “both costly and regressive”.

Writing in today’s Herald on the ongoing debate about the future shape of public services in Scotland, Prof Kerley has also raised concerns over calls to cut the number of councils, claiming there is no guarantee this would deliver better or cheaper services.

He claimed that while Scotland had fewer and bigger councils than any other comparable European country, some of those nations had superior municipal services.

Encouraging those interested in the shape of Scotland’s local democracy to “think of the bigger picture”, Prof Kerley also criticised the approach to public services which only called for the recruitment of more professionals to be sent to “the frontline”.

He said: “The current Commission on Local Tax Reform is looking at council tax but needs to be encouraged to look more widely still; for example at relocalising business rates and empowering local councils to levy a tourist tax on hotel visits.

“The most successful tourist destination in the world, France, has a modest tax on all hotel and visitor apartment bills, and people still keep visiting.

“We have fewer and bigger councils than any other comparable country in Europe and in some of those countries they have better council services than we do.

“So creating fewer, bigger councils is no sure guarantee of better services or even cheaper . Those who argue for fewer councils also avoid the really hard question; If 32 is too many, what’s the right number: Twenty-two? Twelve? Six?”

Prof Kerley, professor of management at Edinburgh’s Queen Margaret University, commented amid The Herald’s Reshaping Scotland series, which has looked at the problems facing local government at time of mounting financial pressure.

It is estimated the country’s 32 councils face overall cuts of at least £1 billion across the next two financial years, impacting on front line services such as education, care and cleansing.

Several thousand jobs are also expected to go across the period. The series has also looked at the local government finances, coming in the middle of the Scottish Government’s Commission looking at reform.

Prof Kerley’s tourist tax call follows a pitch by former Labour leadership candidate Sarah Boyack to introduce the scheme had she won last year.

It has also been raised again in Edinburgh in recent months.

Meanwhile, Cosla, which represents most Scots councils, also said town halls should ultimately raise half their £10bn budget locally, with the other half from central government, instead of the current 18 per cent raised through council tax.

The extra would come from letting councils set business rates for the first time since they were centralised in 1990, and devolving land and building transaction tax to authorities.

Writing in The Herald recently, local government minister Marco Biagi and Cosla president David O’Neill said the commission’s work would inform the local taxation policy of whatever Scottish Government is elected in May 2016.

They said: “By engaging with the public, understanding the real world constraints and analysing the options available to us, this crossparty and cross-government commission has the opportunity to pave the way for real change and a tax system that is fair and fit for purpose in the 21st century.”

IN many ways, what The Herald Reshaping Scotland campaign illustrates is just how difficult it will be to reshape Scotland. There are always those who will argue that, at the heart of a democratic system of local government, is the absolute right for different councils to make different choices; that’s the local and the democracy. Yet whenever that happens, others will raise the cry of “a postcode lottery”.

Some people argue for fewer bigger councils; others for more, smaller councils. Can we make sense of this mess ? Well, let’s start with the scale and therefore geography of our councils.

We have fewer and bigger councils than any other comparable country in Europe and, in some of those countries, they have better council services than we do. So creating fewer, bigger councils is no sure guarantee of better or even cheaper services. Those who argue for fewer councils also avoid the really hard question: if 32 is too many, what’s the right number. Is it 22? 12? Six?

The answer often given is to suggest about the same number of councils as health boards. Really? With three island group health boards of under 30,000 population and Greater Glasgow with 1.2 million people, there is even greater contrast of scale than we have in our existing councils. Social care integration may also see smaller health boards disappear anyway.

Those voices calling for far more and much smaller councils spread across many parts of the country look back to a “golden age” of democracy. The historic evidence of “better democracy” is weak.

When we had counties, large burghs, small burghs and so on we often had appalling levels of democratic engagement: very low turnouts and often no elections in some burghs and counties, with candidates returned unopposed.

Even in the four cities, uncontested council wards were seen right through the 1950s into the early 1970s. The problem of low levels of turnout was one of the reasons why the 1975 dramatic reduction in the number of councils was introduced. Current levels of turnout are poor, agreed; however, we do now at least have contested elections throughout Scotland.

Our problem is wider, and UK wide: with the exception of the 2014 referendum, and the 1998 Northern Ireland referendum, we are just simply less keen on voting than are people in many other European countries.

It is no easier to find solutions when we look at local government finance, a topic simultaneously capable of inducing both boredom and rage. The council tax “freeze” was a vote winner for the SNP in 2007, so popular that in 2011 other parties lined up behind it.

In private, politicians of all parties accept it is both costly and regressive (many higher income households do far better out of it than do low income households) but many are anxious about what comes next.

Bear in mind that this element of council funding only accounts for approximately 18 per cent of council income and you ask why little thought is given to the other 80 per cent or so.

The Commission on Local Tax Reform is looking at council tax but needs to be encouraged to look more widely still; for example at re-localising business rates and empowering local councils to levy a tourist tax on hotel visits.

The most successful tourist destination in the world, France, has a modest tax on all hotel and visitor apartment bills, and people still keep visiting.

We have had the Burt review of local government finance, torpedoed by both major parties within an hour of publication. The Beveridge report pointed at expense and how we might save costs while maintaining services.

The Christie report argued, with powerful live illustrations, how we might better anticipate disadvantage and act to prevent rather simply try to cure, and was immediately welcomed wholeheartedly by the government; always a bad sign, incidentally.

Across many public services we seem to prefer the Lord Haig approach: 1,000 more police, 1,000 more nurses and more teachers, all sent to the “front line”.

What Reshaping Scotland encourages us to do is to think of the bigger picture, not just the jigsaw pieces. We need to do that, urgently.