Isle of Iona

From: Iona Community Council
Subject: Visitor Levy consultation: Iona Community response
Date: 30 January 2025 
To: Kirsty Flanagan, Jim Lynch
CC: Jenni Minto MSP, Cllr Amanda Hampsey, Cllr Andrew Kain, Cllr Willie Hume

 

Dear Kirsty and Jim, 

We’re responding by email to your consultation on a Visitor Levy, because as a Community Council we don’t fit into your resident, business or visitor questionnaires.

Please include this response when collating and reporting on the feedback to the Council:

We’re concerned that the thrust of the proposal takes no account of WHY visitors come to Argyll and Bute and what makes their visit positively memorable: first and foremost, for the area to be attractive, it has to have a vibrant population, which has good health, education and other public services; plus cohesive and well-maintained infrastructure, communications, and all that contributes to a place that local people want to and can afford to live in. Visitors will buy into a place that has vitality and is well-cared for, and in which residents have pride.

We’re concerned that by focusing on tourism first, the Council is failing to consider the real implications and risks of a Levy to Argyll & Bute’s communities and businesses. As examples, please see: 

• The Council Leader’s covering letter to the consultation;
• The summary of Implications (section 5.0) which presents the one sole risk of this proposal as being the Council missing out on an income generation opportunity.

We don’t see coherence with the following (paraphrased) Council priorities: sustaining island life; reducing rural deprivation and improving people’s quality of life; making Argyll and Bute a place where people want to live (well into old age) and bring up families, etc. We don’t see robust logic of how imposing the Levy will directly benefit residents’ and communities’ economic and wider wellbeing. We believe that infrastructure and other investments must primarily benefit locals and support these Council priorities; visitor-focused investments must be complementary and secondary.

And specifically for islands, the proposal is self-contradictory, for example:

• In the key section Implications: “5.5.3 Islands: if approved, the same Visitor Levy scheme … will not disproportionately impact island accommodation providers any more than those based on the mainland throughout the region” (which we refute);
• Versus P26: “Strategic reinvestment of levy funds to support island-specific tourism will be essential to ensuring that these communities benefit from increased visitation rather than reduced demand, including areas that are not Council remit” (i.e., a Levy entails significant risks and new financial burdens).

The Council has not recognised that its own island residents will be disproportionately disadvantaged by a Visitor Levy as an ‘Away-from-home overnight tax’ (we’re concerned that in the report to Council this was partially played-down and otherwise ignored):

• As other island Community Councils have made clear to all of our ward councillors (including the Council Leader), Iona residents and other islanders very often stay overnight in Oban and elsewhere in Argyll and Bute because they have no choice – islanders must stay frequently on the mainland including for: essential healthcare, supporting our away-from-home High School children, work (e.g. meetings, maintenance, repairs, essential supplies etc.), onward travel, and dealing with the fallout of very frequent ferry cancellations and disruptions – as just one recent example, the Iona ferry could only operate 08:30-15:45 for several weeks in December/ January, making a day return to Oban impossible;
• On these essential visits, island residents are not staying in (P33) “holiday accommodation”;  
• There’s no recognition that islanders already experience lower average wages and higher costs of daily living, with a greater proportion of income spent e.g. on food and fuel than on the mainland; nor is there recognition of the already draining non-financial costs of travel to attend medical and other appointments;
• A Visitor Levy would also impact on the budgets of other predominately public bodies – e.g. health boards/ GP practices and other health professionals who visit islands and have to stay overnight, CalMac, Scottish Fire and Rescue trainers etc – where staff costs are increased and/ or expenses are reimbursed to patients/ travellers. These new costs would be detrimental to essential and lifeline services, and would be better spent as intended, e.g. on medical treatment;
• A Visitor Levy would increase costs to islanders of most of the work carried out on islands by contractors and skilled tradespeople, which is essential to island sustainability and often requires overnight stays in Oban or on islands. A Levy would also further increase costs e.g. of public and community projects where capital costs are already exceptionally high and it’s very challenging to secure off-island skilled contractors.

The Council proposes to have no exemptions beyond those set out nationally. The justification – to keep down admin costs of the scheme and maximise revenue – is indefensible in terms of the categories above: island residents on frequent essential overnight travel; and employees of trades, businesses, etc. who need to work on islands; and essential/ lifeline public services which serve islands.

We’re concerned by statements, e.g. on P1 that, “Many of these services rely on our shrinking public sector budgets and are not a duty of a council to fund”. If that is the case – and we’d appreciate knowing what these services are – we’d expect the Council to consider the priority given to their ongoing funding within the annual wider budget process. We do, though, believe that an adequate number of good standard public toilets is something the Council should continue to provide as a basic human necessity, regardless of the legislative position.

We’re concerned that the one-page section (P26) entitled ‘Impact on Island Communities’ is intended to be the mandatory Island Community Impact Assessment (ICIA), which would mean the Council is not complying with its Section 7 duty:

• This one-pager on island impacts is written without consultation and evidence from island communities, which are the primary source of evidence of potential impacts of a Visitor Levy;
• Please see: https://www.gov.scot/publications/island-communities-impact-assessments-guidance-toolkit-2/ – "This guidance stresses the importance of consultation and robust community engagement ... It also addresses the need to consult island communities in order for a Relevant Authority to comply with the Section 7 duty. It's important to also note that the Act (Section 11) requires that a Relevant Authority must have regard to this guidance.”
• Please do not regard this response to the consultation as our contribution to an ICIA for Iona.

We’re concerned that the four aims of the Visitor Levy, as proposed, address unproven needs. E.g., Aim 1 is “Extending the season and spreading visitors across the destination”, for which the “overarching focus” is (emphasis added) “Flexible regional marketing activity to promote hero products where there is ambition and capacity” – what are “hero products” and where is the evidence of need or demand for the Council to “market” and “promote” them, whether directly or indirectly let alone to the extent of requiring a new tax?

We believe that the Council’s role in promoting tourism should be to find appropriate ways to support existing destination organisations, and listen to their expertise – e.g. Visit Mull & Iona.  

As strongly argued by Visit Mull & Iona (https://visitmullandiona.org/1388-2/), the Council’s current proposal increases the costs and risks of doing business in a location like Iona, which are already exceptionally high:

• The Council claims visitor numbers are “growing" since 2013 yet admits they have not returned to pre-pandemic levels. On Iona, we would not describe a partial post-pandemic business recovery as a “bounce back” (P28) – recovery has been grinding hard work with many ongoing challenges, including massive challenges with the ferry system, which has long term legacy issues in promoting the island;
• A Visitor Levy would add to severe cumulative challenges, risking further over-bureaucratising and over-straining accommodation provision on islands which are already battling a downturn of visitors (VMI: 12-16% decline reported for Mull & Iona, 2024), UK budget impacts, and the additional costs and administration burden of Short-Term Lets licensing;
• Evidence from our community is that for small businesses, the timing of the proposed Levy feels punitive, including because they have only just gone through the cost and administration time of complying with the above Licensing legislation – many are still waiting for their applications to be processed and still investing money and effort in responding to requests for further information etc. To add another layer of cost and bureaucracy to these small businesses so soon afterwards, particularly when some are still going through the licensing process, does not feel like supporting a sustainable visitor economy – it feels like yet another body blow; 
• The Council acknowledges that a Visitor Levy would worsen the administration burden on accommodation providers and proposes that 2-2.5% of a Levy may be retained to address these additional costs – yet the worked example (Table A3) for a small business (rateable value £15K) would result in £5.97 per quarter being retained, which (assuming the minimum wage is applied) would cover 31 minutes of administrative work;
• As the Visit Mull & Iona response also explains, e.g., the proposal risks tipping small island businesses over the VAT threshold for collecting a tax that is remitted to the Council; and the Levy completely bypasses day-trippers, Cruise ships and campervans;
• Where risks are acknowledged, they are often casually dismissed – as if increasing the strain on and over-bureaucratisation of our island businesses is resolved, e.g., by ‘toolkits’.

We’re concerned that the revenue projections appear over-optimistic and unrealistic:

• A Visitor Levy is claimed to generate £9M gross, which is optimistic compared to forecasting (“5.3 The forecasting work to date has provided three different income scenarios ranging from £6.5m [low] to £8.5m [high]”);
• Administrative costs to the Council are estimated (6.4) at c.£460K per year, BUT this assumes no exemptions beyond those set out nationally, which (as above) is not defensible; and the minimal administrative costs are contradicted later in the document (P28: “Monitoring compliance, managing appeals, and processing reimbursements for exempt individuals will add to the overall complexity and cost of administering the scheme”);
• Also, the Council would have to compensate small businesses for set-up and ongoing returns more than has been factored (see e.g. P22-3);
• There are many other ways in which net revenue is likely to be reduced, e.g.: greater involvement in direct marketing/ staff skills and capacity to expand into new areas as indicated under the four aims; or the additional toll (undefined) on the Council’s own staff overnight accommodation costs and the impact on service delivery; and similarly, cumulative additional costs such as for Councillor accommodation (£23,328 in 2023/24, add 5% levy = £24,494).

In conclusion, the Visitor Levy as proposed is a blunt instrument that for instance: imposes a tax intended for ‘tourists’ on (e.g.), islanders, people who work on islands, the staff and budgets of essential services; penalises and potentially deters overnight visitors whilst bypassing other categories of visitors; and punishes accommodation providers when the Council hasn't even managed yet to deal with the work created by the last new piece of hospitality legislation.

We urge the Council to interrogate the type and scale of claimed benefits, and whether these stack up against the risks, potential harms and unaddressed costs of this proposal.

With best wishes, Iona Community Council