The Council has not demonstrated that visitors create costs requiring a new tax

The proposal starts from the opportunity to raise income from visitors, rather than first — or at any point — establishing the need and rationale for the Levy.

The Council Leader said in July that “Every area of life wants more investment than is available. A visitor levy could bring significant income to support the local visitor economy.” The Council’s formal risk assessment then identifies a sole risk that higher prices could discourage visitors, and immediately counters this risk with the opportunity to secure levy revenue and invest in the visitor economy. These are circular arguments in favour of generating income, not a case for or risk assessment of the Visitor Levy.

The Council has not established that there is a net additional cost attributable to visitors that requires a new tax. It recognises the visitor economy as a major employer, but we see no equivalent recognition, let alone analysis, of its full economic and fiscal contribution — including the taxes and revenues generated by visitor spending and the contribution of visitor businesses to the local economy. The Council refers to pressures placed on infrastructure and services by visitors without demonstrating the scale of those additional costs. Its own impact assessment acknowledges that roads, car parks, public toilets, piers, paths, waste facilities and other infrastructure are already supported through Council Tax and Scottish Government funding. The Council has therefore not demonstrated that the additional costs it attributes to visitors exceed the economic and fiscal contribution generated by the visitor economy, or established how far those costs are already met through existing public funding.

Nor has the Council established how the proposed Levy would support its strategic priorities including sustaining island life, reducing rural deprivation and improving quality of life, or demonstrated that the benefits of the proposed investment would outweigh the costs and risks to the communities and businesses on which the visitor economy depends.

Before any decision to introduce a Levy, the Council therefore needs to establish the need and rationale, and complete the necessary assessment of its risks, costs and benefits across Argyll & Bute, including the differential impacts on individual island communities and the individual ICIAs required for affected islands.

If the Levy is to address visitor pressure, its first priority should be protecting the infrastructure and services that pressure ostensibly affects

The Council describes the Levy as a means of addressing pressures tourism places on infrastructure and services, and says Levy income can support and sustain local services and infrastructure for the visitor economy and residents.

The priority for that income should therefore be protecting and future-proofing the services and infrastructure whose costs the Council says are increased by visitor demand, with investment linked to the demand placed upon them — rather than using the income primarily to stimulate further growth in the visitor economy.

Yet the revised objectives do not show how the proposed activities would address the claimed visitor pressures, or why those activities justify imposing a new tax. Instead, the revised objectives largely focus on developing, managing and growing the visitor economy — including activities that could increase the very visitor pressures the Levy is intended to address.

For example, the first objective is now “Extending the season and improving visitor circulation, according to local requirements”, while the proposed areas of spend include destination management and marketing, target-market research, visitor-flow data, segmentation and destination-sensitive campaigns. The Council must demonstrate the evidence of need for these activities, how they respond to the claimed visitor pressures, and why they require additional taxation through a Visitor Levy.

The Levy would add risks and costs to the small businesses and communities it is supposed to support

The Council proposes 2% retention to redress the administrative burden on accommodation providers which it acknowledges the Levy will increase. For a small business in its 2026 worked example, the proposed 2% retention would provide £4.78 per quarter — equivalent, on the same basis as the 2025 calculation, to about 25 minutes of administrative work over three months.

The Council has not established how many hours the Levy will actually require, and a percentage of Levy collected is not a measure of the work required to collect, record, report and account for it. Its own impact assessment also identifies the VAT implications for small businesses.

The Council’s current proposal increases the costs and risks of doing business in a location like Iona, which are already exceptionally high:

• A Visitor Levy would add to severe cumulative challenges, risking further over-bureaucratising and over-straining accommodation provision on islands which are already facing wider cost pressures 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 the sector has already had to absorb the cost and administration time of complying with the above Licensing legislation. To add another layer of cost and bureaucracy to these small businesses, particularly after the additional regulatory burden of Short-Term Lets licensing, does not feel like supporting a sustainable visitor economy – it feels like yet another body blow.

£10 million gross is not £10 million available for investment

The claimed £10M gross revenue falls to approximately £8.5M after identified exemptions, before Council administration, set-up, compliance, reimbursement and business-support costs. The Council estimates approximately £460K annual administration costs and £215K set-up costs. The revised scheme introduces local exemptions and a reimbursement process, and the Council acknowledges that monitoring compliance, managing appeals and processing reimbursements will add complexity and cost. The Council would also need to provide support to accommodation providers for set-up and ongoing returns

The headline figure is therefore not equivalent to the resources actually available for investment.

The new proposal of an exemption for healthcare visits is acceptance that the Levy causes disadvantage to islanders 

The Council previously insisted that no such disadvantage would arise.

In pursuit of an income stream, the Council is creating a tax on islanders and then creating a burdensome exemption mechanism to remove it in only one particular circumstance.

Yet Iona residents and other islanders must 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.

On these visits, island residents are not staying in holiday accommodation. The same additional cost would also fall on health professionals, public bodies, CalMac, contractors and skilled tradespeople whose work is essential to sustaining island life.

The healthcare exemption is itself a burdensome mitigation, which will impose its own administrative and financial costs.

The Council needs to explain the principle on which healthcare travel is exempted while other essential consequences of island life are not, and how these impacts have been assessed.

The ICIA must assess the impact on island communities, not simply collect consultation responses

The Council has said it intends to use consultation responses to inform its draft impact assessments. Consultation responses are not the island-specific evidence required for the statutory ICIA.

Section 11 of the Islands (Scotland) Act 2018 requires Relevant Authorities to have regard to the statutory ICIA guidance, which stresses the importance of consultation and robust community engagement, addresses the need to consult island communities in order to comply with the section 7 duty, and makes clear that an Island Communities Impact Assessment should not become a “tick box” exercise but should instead be informed by meaningful engagement with affected island communities from inception to conclusion.

The Council’s current Q&A states that no work has been done on the impact on island residents per se. The Council therefore needs to establish the full range of likely differential economic and social impacts on island communities, and how the proposal could be mitigated or developed or delivered differently for them.

Responses from island residents and businesses who elect to participate in this consultation cannot themselves constitute a valid research sample, or the adequate research, consultation or community engagement required for an ICIA for Iona.

The opportunity to raise income is not the case for imposing the Levy

The Visitor Levy as proposed would impose a tax intended for visitors on islanders who have no choice but to stay overnight on the mainland, add costs and bureaucracy to small accommodation businesses already facing substantial pressures, and potentially deter overnight visitors while bypassing day-trippers, cruise passengers and other visitors who may contribute to the same pressures on infrastructure and services.

The Council has identified money it could raise; it has not demonstrated why it needs to raise it or why from this particular tax, what resources would actually be available after the costs of operating the scheme, who will bear its costs, or that the benefits will outweigh those costs.

Iona Community Council