Response sent to Councillors Jim Lynch, Amanda Hampsey, Willie Hume and Andrew Kain and Jenni Minto MSP and Brendan O’Hara MP

Visitor Levy: Visit Mull and Iona’s Position

Visit Mull and Iona (VMI) represents 150 members operating 190 Mull and Iona businesses.  VMI believes a visitor levy for Mull and Iona would cause significant harm to the islands’ tourism economies.

Consultation and evidence

The Argyll and Bute 2025 visitor levy consultation drew substantial criticism over its perceived lack of impartiality and revealed strong opposition to the proposal. The public is now being asked to take part in a further consultation, but the revised survey questionnaire fails to satisfy many of the Gunning principles for public consultation. The wording and structure of some questions appear to steer respondents towards supporting the Council’s position. It asks the fundamental question of whether a levy is acceptable only at the end and provides no clear yes-or-no option. VMI believes these methodological flaws limit how accurately the results represent island communities. Instead, what is requires is an economic impact assessment conducted by independent specialist contractors and an Island Communities Impact Assessment (ICIA)

Island-specific impacts

The revised scheme fails to reflect the realities of island life and the visitor economy, despite 17.5% of Argyll and Bute’s population living on islands.

Economic conditions and accommodation capacity

Mull and Iona’s visitor economy is declining because of continued ferry disruption. Combined with the cost-of-living crisis and wider pressure on household budgets, this is now the wrong time to introduce a levy. For island accommodation providers, the levy would add cost and bureaucracy to already high operating expenses and short-term let licensing requirements. Introducing it now could further reduce limited accommodation provision rather than support a sustainable visitor economy. The Council can apply a levy to only part of its area and could therefore exclude the islands.

Day visitors, cruise passengers and motorhomes

The levy overlooks important differences between island and mainland visitors; a single approach will not suit both. Mull and Iona’s proximity to the mainland attracts many day visitors travelling by car. Because the levy applies only to paid overnight accommodation, it may encourage more day trips. Day visitors contribute less to the local economy than overnight guests while adding pressure to roads and ferry capacity, yet neither they nor cruise passengers would contribute through the levy. Charging for paid motorhome pitches, but not the vehicles themselves, may also encourage inappropriate overnight camping.

Unavoidable overnight stays by island residents

Island residents must often stay overnight on the mainland for reasons beyond healthcare or school duties, including work, essential supplies, onward travel and ferry disruption. The proposed healthcare exemption acknowledges that the levy can disadvantage island residents, but islanders may have no alternative to an overnight stay for many other essential reasons. Essential workers, contractors, public bodies and transport providers may face similar costs, adding further disadvantages to island life.

Distribution of investment and island alternatives

Tourism accounts for a large share of Mull and Iona’s economy, yet the draft scheme does not guarantee the islands a proportionate share of levy investment.

Orkney and the Western Isles have decided not to introduce an overnight visitor levy at present. They have suggested that, if legislation permitted, island areas could instead consider collecting a levy at sea and air entry points.

Costs and administrative burden on accommodation providers

VAT is expected to apply to the levy, and the income collected may count towards an accommodation provider’s VAT-taxable turnover. This could have serious financial consequences for the many Mull and Iona businesses nearing the VAT-registration threshold.

Requiring accommodation providers to collect and administer the levy for the Council would impose an unfair burden. The revised proposal would allow providers to retain 2% of the levy collected to offset administration costs. In the Council’s example, this would provide just £4.78 per quarter—equivalent to about 25 minutes of administrative work and is not linked to the actual time required to collect, record, report and account for the levy,  or VAT implications.

Requested action

In line with representations from Iona Community Council, Mull Community Council and AITC, VMI is calling on the Council to pause the levy proposal until an independent assessment has been published and considered, showing whether the expected benefits outweigh the costs and risks. Before making any decision, the Council should set out a clear rationale and assess the costs, benefits, risks and distinct effects on islands and the individual ICIAs required.

Conclusion

The proposed visitor levy does not adequately reflect the economic conditions, travel patterns or unavoidable costs of island life on Mull and Iona. It would place additional financial and administrative pressure on accommodation providers and island residents, while offering no assurance that levy income would be invested proportionately in the islands. Until independent economic and island-specific impact assessments demonstrate that the benefits would outweigh these risks, VMI believes Mull and Iona s