Edinburgh is set to become the first city in Scotland to introduce a tourist tax after the Scottish government granted powers to local authorities to introduce visitor charges.

Edinburgh’s city council has approved a proposal called the ‘Transient Visitor Levy’ to be introduced in 2026.

The fee has been set at five per cent of accommodation costs and is expected to raise up to £50 million (€59 million) a year to be used to make improvements to the city.

However, some tourism operators are concerned it will put travellers off the destination.

Authorities in the Scottish Highlands are also considering introducing a tourist tax.

Edinburgh to become the first city in Scotland to charge a tourist tax

Last September, Edinburgh officials approved a proposal to charge guests at hotels, B&Bs, hostels and holiday rentals including Airbnbs five per cent of the cost per room per night.

The fee will be capped at seven consecutive days and is scheduled to come into force on 24 July 2026.

A new report for the council’s policy and sustainability committee has proposed introducing a transition period to help businesses adjust.

This means tourists will likely only be required to pay the tax on bookings made after 1 May 2025 for stays after 24 July 2026.

The measure comes after the Scottish Parliament passed a bill that allows local authorities to introduce visitor taxes.

The city council says the funds will be invested in infrastructure, affordable housing, destination management and culture, heritage and events.

The tax is expected to raise up to £50 million (€59 million) per year by 2029 for the Scottish capital.

Council leader Cammy Day said 35 per cent of the proceeds will be earmarked for the arts sector.

Tourism operators concerned over introduction of Edinburgh tourist tax

The fee will bring Edinburgh in line with other popular tourist destinations around Europe including Amsterdam, which has a 12.5 per cent tourist tax, and Berlin.

However, some tourism operators worry the levy will make Edinburgh a less competitive holiday destination and deter visitors.

“It remains a very contentious matter,” Marc Crothall, chief executive of the Scottish Tourism Alliance, told travel news site Skift.

“There are concerns around the future total price point to the customer and what impact this might have on future bookings, especially by our domestic visitors when there are already signs of decline in bookings from this market due to the UK cost of living crisis still biting.”

But Day thinks the tax won’t put off visitors. “I can’t see a few pounds putting somebody off visiting the city,” told BBC Radio Scotland. “If you can afford to spend hundreds of pounds on a hotel room, you can afford a few pounds to support the city that you are visiting.”

Scottish Highlands mull tourist tax

The Highland Council is also considering implementing a tourist tax under the new powers introduced by the Scottish Government.

The region of mountains and glens receives over six million tourists a year, including daytrippers and cruise passengers.

As with the Edinburgh tax, it would be a percentage of the accommodation cost per night.

The Highlands region was already considering a visitor charge in 2019 and calculated that it would raise as much as £10 million (€12 million) a year to go towards improving local infrastructure.