The evidence
What the council's own report says
In May 2026 the council received an independent Economic Impact Analysis of the visitor levy from the Moffat Centre for Travel and Tourism Business Development at Glasgow Caledonian University. It was published as Appendix 4 to the June 2026 council report. Everything on this page comes from that document unless stated otherwise. Read the council papers.
We are not asking you to trust us. We are asking you to read what the council was told.
- Our visitor economy is big, and it is local
- Every rate tested shrinks the local economy
- Even with every penny spent well, we are still worse off
- The revenue figure is probably too high
- A flat £4 hits the cheapest stays hardest
- The VAT trap: a tax on a tax
- The report's own caveats
- What the council's summary leaves out
Our visitor economy is big, and it is local
- £367.5mspent by overnight visitors each yearSource
- £323.6mof economic value (GVA) in the areaSource
- 7,084full-time equivalent jobs supportedSource
- 2.01mvisitor nights spent here each yearSource
Overnight visitors spend about £367.5 million a year: roughly £257m on accommodation and £111m in local shops, restaurants, attractions and transport.
The report notes that about 88p of every pound visitors spend stays in the local economy. Tourism here is run by local businesses employing local people. That is exactly why a charge that deters visitors hurts the wider community, not just accommodation owners.
Every rate tested shrinks the local economy
The report models four levy rates and three levels of visitor price-sensitivity. In every combination, the visitor economy is smaller with the levy than without it.
| Levy rate | Net levy raised per year | Loss to local economy (GVA), central scenario | Jobs lost, central scenario |
|---|---|---|---|
| £2.50 | £4.87m | ~£5.5m | 122 |
| £3.00 | £5.85m | £6.6m | 147 |
| £4.00 (proposed) | £7.80m | ~£8.8m | ~196 |
| £5.00 | £9.75m | ~£11m | 244 |
Notes: net levy is after the report’s 3% deduction for collection and enforcement. The £3 GVA and all job figures except £4 are stated in the report. Other GVA figures are read from the report’s chart. The report’s jobs panel shows £2.50, £3 and £5, but not £4, the rate the council is actually proposing; the £4 figure is the straight-line midpoint of the £3 and £5 figures, consistent with the Association of Scotland’s Self-Caterers’ published reading of the same model. See our calculations.
Text description: at every rate the loss to the local economy is larger than the levy raised. At £2.50, £4.9m raised against ~£5.5m lost. At £3, £5.8m against £6.6m. At the proposed £4 (marked ★), £7.8m against ~£8.8m. At £5, £9.7m against ~£11m. The table above has the same figures.
What this means: at the £4 rate, the money the council would collect is less than the economic activity the area would lose.
Even with every penny spent well, we are still worse off
The council’s answer to this is “reinvestment”: the levy money spent locally will generate economic activity of its own.
The report tested this at £3 a night. It found reinvestment could add £2.34m to £2.81m of economic value and around 100 jobs. Set against the £6.6m loss and 147 jobs at £3, the area is still about £3.8m to £4.3m a year worse off, with around 40 to 46 fewer jobs.
Scaled up to the proposed £4 rate, reinvestment would add roughly £3.1m to £3.75m against a loss of about £8.8m. That leaves the area around £5m to £5.7m a year worse off even on the most favourable reading.
The report itself describes these reinvestment figures as illustrative, not guaranteed outcomes. The losses come from the same Scottish Government methodology the council is relying on. The benefits depend on the council choosing and delivering the right projects, and none have yet been named.
Text description: at £3, the best-case reinvestment benefit of £2.81m leaves a net loss of at least £3.79m. At the proposed £4, the scaled best case of ~£3.75m leaves a net loss of at least £5.05m a year.
The revenue figure is probably too high
The headline £8m relies on assumptions the report itself flags:
- No exemptions. The report applies no exemptions at all. But the council’s draft scheme exempts Perth and Kinross residents, and the law exempts some other stays. Every exempt night reduces the money raised.
- Every visitor night is treated as a separately charged room. The report counts 2.01 million person-nights and treats them as 2.01 million chargeable room-nights, assuming one person per room. But the levy is charged per room or unit, not per person. A couple sharing a room pays £4, not £8. A family in a holiday cottage pays £4, not £16. If rooms average two guests, the revenue would be closer to £4m than £8m. The report says that changing this assumption would also reduce the number of visitors deterred, so the loss figure would move too. The council should publish what occupancy it really expects and rerun the numbers.
- Accommodation providers keep 2.5%. The draft scheme lets providers retain 2.5% to cover their costs. This is on top of the 3% collection cost in the model, so it reduces the council’s take further.
- No growth or decline. The model assumes visitor numbers stay flat for five years.
After resident exemptions, the provider retention, and realistic room occupancy, how much will this levy actually raise? Councillors should have that figure before they vote.
A flat £4 hits the cheapest stays hardest
The report works out the levy’s impact using a weighted average room rate of about £128 a night. At that price, £4 is about a 3% increase.
But Perth and Kinross isn’t all £128 hotel rooms. Twelve percent of visitor nights are at holiday parks and campsites, and more are at hostels and modest B&Bs.
Text description: £4 adds about 3% to a £128 hotel room, about 7% to a £60 B&B room and about 16% to a £25 campsite pitch. One Aberfeldy motorhome operator says £4.80 including VAT would add 50% to his cheapest price.
The visitors most likely to be put off are the price-conscious walkers, cyclists, campers and families. They are the people who fill our rural businesses outside the hotel season. The council’s model averages them away.
There is also no cap on the number of nights. Edinburgh caps its levy at five nights; Perth and Kinross’s draft scheme has none. A family taking a fortnight in a Highland Perthshire cottage would pay £56 on top of their booking.
The VAT trap: a tax on a tax
- £4.80what the visitor pays at a VAT-registered business, of which 80p goes to HMRCSource
- up to £1.6ma year in extra VAT on the levy, leaving Perth and Kinross entirelySource
- £90kVAT registration threshold, which levy collected counts towardsSource
The levy is worked out on the price before VAT. But HMRC treats it as part of the price of the room. That has three consequences the council’s report does not model.
VAT is charged on the levy itself
For VAT-registered businesses, 20% VAT is added to the £4 levy. The visitor pays £4.80, not £4. The council receives £4, and the other 80p goes to HMRC. Across the 2 million or so nights in the council’s model, visitors would pay up to around £1.6m a year in extra VAT on top of the levy, money that leaves Perth and Kinross entirely. (Upper bound: assumes every night is at a VAT-registered business.)
The levy counts towards the VAT registration threshold
HMRC has confirmed that levy collected by a business counts as part of its turnover when working out whether it must register for VAT. The threshold is £90,000 a year. The business never keeps the levy, because it passes straight to the council, but it still counts.
A guest house takes £87,000 a year from about 1,200 room-nights. The £4 levy adds £4,800 to its turnover, taking it to £91,800. It must now register for VAT. That means either adding 20% to every price or absorbing it. If it holds its prices, about £14,500 a year of its takings becomes VAT owed to HMRC (one-sixth of VAT-inclusive takings, before any VAT it can reclaim on costs). The levy money it was forced to collect is what pushed it over the line.
That falls hardest on exactly the small, owner-run B&Bs, guest houses and holiday lets that sit just under the threshold, and there are a lot of them in rural Perthshire. The Scottish Government’s own impact assessment for the original Bill recognised this risk of small businesses being tipped over the threshold. The council’s economic report does not mention it.
Exempt visitors may get the levy back, but not the VAT
Under the Act, people receiving qualifying disability benefits must be exempt. In practice, councils are handling exemptions by reimbursement: the visitor pays the levy, then claims it back from the council. If the Perth and Kinross resident exemption works the same way, local residents would be in the same position.
The council can refund the £4 it received. But where VAT was charged, the 80p went to HMRC, not the council. VisitScotland’s national guidance for accommodation providers lists the question of how VAT is handled on these refunds, and says only that details will follow in a later version. As far as we can find, that answer has still not been published.
- How will the resident exemption work in practice: not charged at all, or charged and reimbursed?
- When a disabled visitor or a resident is reimbursed, will they get back the full £4.80 they paid, or only £4?
- Has the council estimated how many local businesses the levy will push over the VAT threshold?
- Does the draft scheme include or exclude businesses below the VAT threshold?
Note for accuracy: business travellers whose employers are VAT-registered can usually reclaim the VAT on a hotel bill, including the VAT on the levy, in the normal way. The VAT problem bites on private individuals, exempt visitors, and small accommodation businesses near the threshold.
The report's own caveats
The report is honest about its limits, and councillors should weigh these:
- its figures are gross, not net: standard adjustments for displacement and deadweight have not been applied
- it does not apply HM Treasury additionality corrections
- it relies on a price-sensitivity range from the Scottish Government’s research that runs from very low to very high, and says it cannot tell which is most likely
- in its worst case (£5 a night, high price-sensitivity), the area loses £19.4m a year in economic value
What the council's summary leaves out
The report’s conclusion describes the £3 scenario as its central case and calls the economic trade-off “modest”. But the council is not proposing £3. It is proposing £4, which costs more and deters more. The scenario councillors are being asked to approve is not the one the headline conclusions describe.
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