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I am conscious of the committee’s broader interest in public service reform. Clearly, automation will be central to that. We all appreciate that automation provides tremendous opportunities but also significant risk. I imagine that we all agree that we want to seize those opportunities in a way that does not expose us to, or which minimises, the risk that comes with those. Therefore, with regard to this instance, we recognise that, if there is an opportunity for processes to be automated that will improve the efficiency of Revenue Scotland and enable it to free up staff capacity to take on more complex judgment-based activities, that would be a good thing.

Therefore, the questions are how we can achieve that and how we can be assured that proper consideration has been given to achieving that while avoiding the risks. That is why we have set out that this would be a regulation-making power. There would be consultation and stakeholder engagement as part of that and, of course, parliamentary scrutiny. However, I want to reassure the committee that, although the Government recognises the huge opportunities that artificial intelligence provides for more efficient and effective delivery of public services, we also recognise that there are concerns about some of the risks that can attend the adoption of AI. It is important that we fully interrogate those risks in a transparent way and that Parliament is fully involved.

With regard to the regulations that would be brought forward under the provisions in the bill for automation in Revenue Scotland, I can commit to providing a full opportunity for parliamentary scrutiny on top of the public and stakeholder consultation and engagement.

You will appreciate that I would not want to speak on behalf of the whole Government on broader issues of parliamentary reform, not least because I recognise the independence of Parliament in those matters. However, with regard to my portfolio responsibilities around devolved taxation and the work that I do in supporting the Deputy First Minister on the budget process, I am happy to explore where there could be consensus. I appreciate that the Parliament might wish to provide a broader context for the consideration of issues of parliamentary reform, and I recognise the work that your predecessor committee in the previous session of Parliament undertook and led on in that area.

As I have said, there are clear arguments for such an approach, but people might want to use other arguments against it. There will be an opportunity to have that discussion. Given the interest that members of the committee and stakeholders have expressed, I would be keen to engage, but I stress and reiterate the point that the approach that we have around the budget process has been arrived at jointly with Parliament. I do not want to risk saying anything that would be contrary to the spirit of that.

I have no further comments, convener.

Amendment 17 agreed to.

Section 36, as amended, agreed to.

Sections 37 to 75 agreed to.

Long title agreed to.

The amendments form an important group, as they relate to how businesses will be affected by any visitor levy that a local authority seeks to introduce.

Amendments 3 and 5, which were lodged by Pam Gosal, seek to exclude from having to collect and remit a visitor levy any visitor accommodation that is operated by a body with an annual turnover that is below the VAT threshold. I know from my discussions with business organisations that there is a concern about the VAT treatment of a visitor levy, which would be decided by the United Kingdom Government. The Scottish Government cannot decide the position on VAT. The Scottish Government’s position is that any local authority that is thinking of introducing a visitor levy will need to consider the potential VAT implications for relevant businesses in its area.

Under the bill as introduced, a local authority, when creating a visitor levy scheme, could choose to create an exemption from the scheme for businesses that are near the VAT threshold. However, I am not persuaded that that should be imposed at the national level. Local authorities are best placed to know their local circumstances and the businesses in their area. I do not want to remove the discretion for local authorities to decide what exemptions work in their area, including in relation to VAT.

For those reasons, the Government does not support amendments 3 and 5, and I ask the committee not to support them.

I understand the motivation behind Daniel Johnson’s amendments 38 and 39. The Government continues to listen to businesses, and we will seek to minimise the administrative burden as much as possible for businesses that are implementing a visitor levy. However, I am not persuaded that we should remove from local authorities the flexibility to decide what is right for their local circumstances, or that a national definition of a small business, imposed by ministers in regulations, is the correct approach. A local authority could choose to create an exemption for small businesses in its area if, after consultation, it was decided that it was right to do so. Given that flexibility in the bill, the Government does not support amendments 38 and 39, and I ask Daniel Johnson not to move them. However, I am happy to continue to have discussions. I think that aspects of the administration and Mr Johnson’s well-made points can be captured through the guidance process.

I appreciate the intention behind Miles Briggs’s amendment 42. I agree that it is essential that businesses are fully engaged in any decision to introduce or modify a visitor levy scheme. I also agree that any impacts of a visitor levy scheme on a local authority’s area should be fully assessed. Section 12 of the bill already requires a local authority to carry out such an assessment, so I do not think that amendment 42 is necessary. The expert group on bringing together business organisations and local government is currently developing national guidance for local authorities on the use of any visitor levy power. I expect the guidance that it produces to cover the impact assessments that it would be good practice for local authorities to produce. I have also lodged amendment 15, which is in a later group, to put the guidance on a statutory footing. If Mr Briggs still feels that further details are needed on the impact assessments to be completed by local authorities, I would be more than happy to meet him and potentially to write to the expert group to ensure that it is taking that important aspect on board.

I will speak to all the amendments in the group, including amendment 6, which is in my name.

As we have heard, amendments 27, 30 to 32 and 45, in the name of Miles Briggs, seek to substitute the word “percentage” for “flat”, to ensure that a flat rate is used in calculating the fee. As recommended in the committee’s stage 1 report, we have explored whether a consensus can be found on the basis of the charge for a visitor levy. We have not identified a consensus on that point within and among businesses, tourism organisations and local authorities. The Government will continue to explore the issue as the bill progresses, but in the absence of a consensus, the Government’s position remains that a percentage charge provides a consistent basis for a visitor levy and would mean that the level of visitor levy that is paid reflects what someone is willing or able to spend on their accommodation. We have heard arguments deployed on the relative merits of both approaches, and I note the points that Mr Briggs raised around the percentage levy and Mr Johnson’s points around some of the challenges around a flat rate, such as the fact that it would not take account of inflation or seasonality, and the administrative concerns related to that that he mentioned.

Although the amendments in the name of Miles Briggs have provided an opportunity to consider and discuss again the basis on which the levy is to be calculated, I do not support them, for the reasons that I have outlined, and I ask the committee to reject them, should Miles Briggs press them.

Amendments 29 and 51, in the name of Miles Briggs, are designed to remove section 5 in its entirety. Given that section 5 sets out how the visitor levy is to be calculated, agreeing to those amendments would fundamentally undermine the bill, so the Government does not support them.

Amendments 33 to 36 seek to alter ministers’ ability to set out in regulations made under section 9 what accommodation providers in areas with a visitor levy must include in their bills and what they must publish. The amendments would remove key parts of what the regulations might set out, including, for example, a requirement that invoices specify the accommodation portion, or that the accommodation portion of the rate of a levy is published by a liable person. The provisions in section 9 are there to be used, if necessary, to ensure transparency for visitors on the visitor levy that they have been charged and the calculation on which it has been based. As that is an important safeguard for customers, it needs to be kept in the bill, so I ask Miles Briggs not to press or move any of his amendments in this group. If he does, I ask the committee not to support them.

Amendment 28, in the name of Daniel Johnson, seeks to put a cap on the number of nights in one month—in this case, 14 nights—for which a visitor can be charged the visitor levy. As a point of clarification, I note that there is currently no cap in the bill, although local authorities can choose to put one in place, under the provisions of the bill as introduced. I know that a cap on the number of nights is something that both industry and local government have raised, and it is something that some local authorities that wish to introduce a visitor levy have been considering. The Government does not support amendment 28 as it stands, because it raises practical difficulties around how different local authorities would be aware of how many nights of the levy some visitors had already paid; I am thinking, for example, of a 20-night stay across various parts of Scotland. I am also mindful of the need to give local authorities the flexibility to shape a visitor levy in order to meet local circumstances.

However, given the interest that some local authorities and tourism businesses have shown in a cap, I ask Mr Johnson to meet me between stages 2 and 3 of the bill to see whether there is a proposition that can command support from local government and the tourism industry. With that in mind, I ask him not to press amendment 28.

Amendment 6 relates to the Government’s position on the basis of the charge. As I said earlier, in the absence of a strong consensus on the basis of the charge, the Government believes that a percentage charge provides a consistent basis for a visitor levy and means that any visitor levy will be proportional to the amount that someone has chosen to spend on their accommodation. However, in light of industry concerns that there is currently no mechanism in the bill for setting a maximum rate, the Government has lodged an amendment that would give Scottish ministers the power to set a maximum percentage rate for a visitor levy, subject to certain conditions.

If approved, the power could be used only after consultation with local authorities, representatives of businesses that are engaged in tourism, tourism organisations, representatives of communities and any other relevant persons. It would also require Parliament to approve, under the affirmative procedure, any cap before it came into force. The Government feels that that strikes the right balance between local autonomy that allows for local decisions to reflect local circumstances, and the industry’s genuine concern that there is no mechanism for limiting the level at which a visitor levy could be set. The new text that is proposed by amendment 6 would provide a mechanism that could be used, if necessary, after consultation and with parliamentary approval. I therefore conclude my remarks by asking the committee to support amendment 6.

To clarify, there is no Scottish Government proposal. In the supporting documents to the bill, illustrative examples were provided on costs to assist members and the wider public and stakeholders in engaging with the legislation. However, in the bill as introduced, determining the rate is a matter for local authorities.

What we have proposed through amendment 6 is a power for a national cap mechanism, through regulations and the various associated provisions that have I set out. However, in the bill as it stands, it would be for local authorities to determine what the rate should be.

Before I focus on the amendments related to funding, I will make some general points on that issue. In developing the proposals in the bill, the Government consulted and engaged with local authorities and the tourism industry. It was and is the very clear position of the tourism industry that funds raised by a visitor levy should be invested in the visitor economy. The bill therefore will ensure that that is the case, by putting in place a measure to give local authorities the freedom to use the funding that is raised as they believe appropriate to support the visitor economy in their areas.

The current wording in the bill has been carefully crafted to mean that the use of net funding raised by a visitor levy shall be spent on facilities and services with a strong connection to the visitor economy. If there are things linked to the visitor economy that members believe the current wording would preclude a local authority from funding, I am open to constructive suggestions from the committee or other members on how to address that, and I would be happy to consider refining the wording as necessary ahead of stage 3.

It will be for a local authority, following consultation with local communities, tourism businesses and local tourist organisations, to decide how the funding that is raised by a visitor levy is spent. Local authorities will want to use the funding in a way that best supports their local visitor economy. I am aware that those needs will differ across the country—ranging from improving street dressing to supporting work to promote a destination, investing in relevant regeneration and, potentially, supporting affordable housing projects, recognising that tourism businesses can struggle to retain and recruit staff due to accommodation issues, as part of the wider pressures on local housing markets.

I should make it clear that it will not be for the Government to permit or exclude any particular use of the funding. Within the broad parameters in the bill, that is rightly a decision that will be made at a local level, after local consultation. This is an area that I would expect the national guidance that is currently being developed by local government and the tourism industry—and that is to be given a statutory basis under amendment 15—to address.

In that context, I now turn to amendments 20 and 24 from Sarah Boyack. They relate to the objectives that a local authority sets for a visitor levy scheme, under section 12, and the use to which the funding raised by a visitor levy can be put, under section 17. The Government’s position is that funding raised by a visitor levy should be used on facilities and services that have a clear link to the visitor economy. The wording in section 12 requires scheme objectives to

“relate to developing, supporting or sustaining facilities or services which are substantially for or used”

by visitors. Section 17 requires scheme proceeds to be used to further those objectives or otherwise to be used for

“facilities and services which are substantially”

for visitors.

As I outlined earlier, I am open to constructive suggestions from members if the current wording in the bill would preclude a local authority from funding something related to the visitor economy. However, the Scottish Government believes that simply removing the word “substantially” would weaken that aspect of the bill. It is there to ensure that there is a clear link to the visitor economy in respect of the use of revenue that is raised from a visitor levy. That has been a consistent ask of the tourism organisations and the accommodation providers that would collect and remit any visitor levy. On that basis, I ask Sarah Boyack not to press amendment 20 or move amendment 24.

Mr Briggs raises an important point. I would be happy to consider how the existing provisions in the bill around reporting, transparency and review mechanisms, not to mention the consultation that precedes the introduction of a visitor levy and the guidance that will be produced, can strengthen those processes to give greater clarity and certainty.

I recognise that it is important that local authorities have the flexibility to invest as they see fit following that process of consultation, but I also recognise that there might be concern around transparency, and I would want to provide assurance on that point. We can probably address that effectively through the guidance that will be provided.

I am happy to engage further with the member on that basis before stage 3.

Good morning. The amendments in the group all relate to the meaning of the term “overnight accommodation” in the bill, which takes a broad approach to the types of overnight accommodation to which a visitor levy could apply. That means that all relevant types of accommodation that are offered for residential purposes—other than as someone’s usual place of residence—are covered by the bill. That approach allows a local authority to decide, after the consultation that it must carry out on whether to introduce a visitor levy, whether there are any types of accommodation that it would wish to exclude from that levy.

Amendment 26 seeks to remove camping sites and caravan parks from the list of accommodation types to which a visitor levy can apply. Such sites are an important part of the accommodation sector, especially in rural areas. There is no consensus within local government or the tourism industry that a visitor levy should never apply to a camping site or a caravan park, so I believe that it should be left to local authorities—after consultation—to make decisions on the matter in a way that reflects their judgment about local circumstances. On that basis, the Government does not support amendment 26, so I ask Miles Briggs not to press it.

In relation to amendment 18, I put on record my appreciation and thanks to Stuart McMillan for the work that he has put in on the issue of boat moorings and berthings, which he raised during the course of stage 1 and in the stage 1 debate.

In its stage 1 report, the committee recommended that the bill should not capture boat moorings and berthings. Stuart McMillan’s amendment 18 would implement that recommendation. There has been consensus from local government, the tourism industry and the committee on the matter. Therefore, the Government supports the amendment, which will remove moorings and berthings from the types of accommodation that the bill covers.

I turn to Liam McArthur’s amendments 1 and 2. I am grateful to Mr McArthur for lodging the amendments and for bringing his experience as a constituency representative to bear. As the amendments work together, I will speak about both of them.

Amendments 1 and 2 seek to bring within the scope of any visitor levy scheme

“accommodation in a vehicle, or on board a vessel, that is undertaking a journey”.

As I understand it, and as Mr McArthur has highlighted, the intention behind the amendments is to highlight the issues of a cruise ship levy and a motorhome levy. Given their relevance to the bill, I will briefly set out the Government’s position on both those issues before addressing the effects of the amendments.

On a cruise ship levy, the Government’s position, as we announced in October, is that we will seek to give local authorities the power to create such a levy. Therefore, we have been working with the Convention of Scottish Local Authorities and local government to scope out the work that is needed on a levy and to assist them with developing a formal proposal for it.

On Friday last week, COSLA wrote to the Government setting out its formal proposals for a cruise ship levy. In line with the new deal for business, we have committed to a public consultation on such a levy once proposals have reached a suitable stage of development to hear the views of all relevant stakeholders.

If policy work and a consultation can be completed in time and Parliament agrees, we will seek to amend the Visitor Levy (Scotland) Bill to include a cruise ship levy. If that is not possible, we will explore other ways of passing the required legislation. I do not want to delay this important bill by waiting for that policy and consultation work to be undertaken, but neither do I want to rush work on a cruise ship levy to meet the bill’s timescales.

I draw the committee’s attention to the fact that I set out the position on VAT in a factual manner. It is a tax that is ultimately decided on by the UK Government, and I respect that. That is just a statement of fact.

With regard to the position of local authorities, the power to impose a levy is a discretionary power. It will be up to individual local authorities to decide whether to use it. A key principle underpinning the bill is the fiscal empowerment of local authorities. To be clear, that is the rationale for giving local authorities that level of discretion in areas such as exemptions and deciding how best to respond to VAT. Local authorities are best placed to make such decisions, as they will ultimately choose whether to implement a visitor levy and administrate it.