Dundee City Council is “actively considering” introducing a tourist tax as the local authority faces a multi-million budget deficit.
At a meeting of the city governance committee on Monday, councillors heard how the local authortity is facing a funding shortfall of £12 million.
This is despite a pledge by the Scottish Government to give around £140 million to local authorities to help them cover the cost of the announced council tax freeze.
Dundee City Council expects to receive around £3.2m of this.
City’s finances are ‘bleak’
Discussing the report, councillors pressed for all avenues of income to be explored – including the introduction of a tourist tax.
A tourist tax is a levy on the occupation of short-stay accommodation in a local authority area.
Labour group leader Kevin Keenan said: “This paints a serious picture of how bleak the finances in the city are and how underfunded we are from the government.
“But just looking at the tools that we may have available and that being that there is a potential for tourist tax.
“Is there any indication that now is the time for Dundee to be thinking about adding a small fee to each of the tourist beds in the city by way of covering the shortfall from government?”
He added: “I should probably put on the record that it’s something that I’m not overly keen to have but just see that Dundee City Council is left absolutely cash strapped with the lack of funding that’s coming from government.
“I think that we need to look at every avenue that brings in a bit of money to the city and that being one of them, without hurting the individuals that live here.”
Tourist tax ‘under active consideration’
Responding to councillor Keenan’s comments, council leader John Alexander said council is already looking into the option of a tourist tax but stressed it won’t be a source of free income for the local authority.
He said: “It’s under active consideration, officers are engaging with colleges in Edinburgh who are significantly more advanced given the scale of the tourism and hospitality sector in Edinburgh.
“I absolutely agree with you I support the introduction of transient visitor levy as it’s called under the legislation.
“It’s not necessarily free money – if that’s the term to use – in the sense that it must relate to expenditure which has some connection to tourism of course – so it can’t necessarily go into any old budget.”
Officers also warned that the tourist tax isn’t a means to plug funding gaps.
Executive Director of City Development Robin Presswood added: “It’s not an easy way of generating general funds.
“It does require to be invested in local facilities and services used by visitors.
“There are restrictions on how we can use it and I think certainly the intention of the act was to improve facilities rather than to substitute for reductions in funding elsewhere.”
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