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That is an excellent question. I appreciate that that is one of the key issues that has emerged from the committee’s deliberations. Certainly, it has been raised consistently with me and my officials in our engagement with accommodation providers. As a starting principle, I hope that we can all agree that there should probably be uniformity—there should be either a flat rate or a percentage fee. Accommodation providers may well look for consistency. If we are going to have a percentage rate, then that is what should be in the bill and should be applicable across all local authorities that are seeking to use the power. Conversely, the same applies to a flat rate.

I recognise that there are strong views in support of both arguments. Clearly, a percentage rate would allow for a more proportionate and progressive approach. It would recognise that, for example, someone who is staying in a suite in a five-star hotel would be subject to a different rate than someone who is staying in budget accommodation. I am conscious that that will be a key concern. However, I also recognise questions that the industry has raised about the compliance and administrative burden that that approach would entail. I appreciate that the options for a flat rate range from a single flat rate to a tiered structure. With a tiered structure, we would potentially start to add in additional complexity, which a flat rate, rather than a percentage rate, would be seeking to remove. I think that it is important to consider the matter in detail.

I am very open to having these discussions. I am keen, on this issue and a number of others, to understand the view that the committee has formed when it publishes its stage 1 report. I am open to looking at amendments to change to a flat rate, but that would require further detailed consideration and engagement with industry. I am also happy to follow up with the committee on the matter ahead of stage 2.

There are strong arguments either way. I recognise that industry has a strong view and that local authorities have a mix of views. As I have said, I want to ensure that we can have a system in which the levy that is applied is fair and progressive and that, equally, is efficient and straightforward to administer, and does not impose undue burdens of compliance, particularly on smaller operators.

There are a number of flexibilities around how a scheme can be developed. For example, there are flexibilities relating to particular areas in the local authority and to the timescales in which the levy applies. Those flexibilities can be applied to address a range of aspects of how a levy should be administered and applied in a local area. There are flexibilities that local authorities could deploy in response to some of those considerations, but it would be for local authorities to take into account the circumstances of businesses that are trading just below the VAT threshold. I recognise that that is a consideration that many businesses, particularly small businesses and microbusinesses, have to take into account.

I reiterate the importance of consultation and engagement and of local authorities being able to set out their understanding of the impact of introducing a levy, and how crucial all that is to ensuring that this sort of thing is taken into account.

I am conscious of the need to talk about a visitor levy—I am deliberate in my use of language when talking about that. It is an opportunity to raise revenue that will be invested back into the visitor economy. To address your question about where the charge lies, there needs to be an efficient and effective way of administering the tax. In this case, just as businesses would collect other taxes, that would be the process by which the levy would operate. For example, if a charge was to be paid directly by a visitor from another part of the world, there could be difficult challenges to do with compliance and enforcement for people who live outwith the jurisdiction in which we operate.

I am keen to continue to engage with businesses, as we have been, in order to ensure that we have an administrative regime that is as efficient and as light touch as possible and that we find national consistency where we can. That is also why we asked VisitScotland to convene an expert group with representatives from local government as well as the visitor economy. That is important because it will enable those representatives to develop best practice and guidance to support local authorities in their implementation of a visitor levy, should the Parliament pass the bill and should local authorities choose to use that power.

There has been some discussion and engagement. I should say that it is not an entirely new proposal—it has been made by various advocates over a number of years—but with the announcement we have made it clear, consistent with our approach in the new deal for business, that there will be detailed engagement as we move forward. A working group that includes Scottish Government and COSLA officials is already looking at the matter.

Clearly, amendments that seek to make provision for a cruise ship levy will be determined by the pace of progress, and we will need to have a public consultation. I know that it is of vital importance to colleagues in COSLA and the Government that we are able, subject to Parliament’s agreement, to pass the bill in a way that allows the powers to come online, as we hope, in the early part of 2026. I therefore do not want to find myself in a situation in which further work is required to develop a cruise ship levy model, which will hold up the work of the bill.

If we make sufficient progress, complete the public consultation and have the required level of engagement with industry and local government on a cruise ship levy, I am open to amending the bill to include the provision. However, it is important that we get that right. I would not want to rush things unduly, but if this is going to take more time I would not want it to hold up the bill’s progress through Parliament.

At this stage, my view is that it would be for Parliament to determine whether a flat-rate model or a percentage-rate model is applied.

Again, I do not want to rule out any particular position. I am open to hearing views, because I recognise that there is a range of them. A compromise position would potentially be to allow local authorities to determine that themselves, but I am conscious that there might well be a view from industry that that would just add further complexity. One of the motives for having a flat rate is the complexity that is involved in administrating a percentage rate, particularly for smaller operators. If we had a set of circumstances whereby there was variation between local authorities, with some applying a flat rate and others applying a percentage, that would not address the issue of complexity.

The levy would need to be applied in a way that is consistent with the new deal for business and the new deal with local government. I would want to explore the issue in further detail to understand what the views are of local authorities and businesses. I recognise that industry is leaning towards a flat rate and that local authorities’ views are mixed.

My view is that what we settle on in the legislation will ultimately be a matter for Parliament to determine. At this point, from my perspective, Parliament should seek consistency: it should be either a flat rate or a percentage rate.

I do not want to pre-empt further discussions with colleagues in local government to understand what their views are. The scheme in the bill has the stated objective of simplifying administration. However, I am conscious that, were we to change what is in the bill—that is, move from a percentage rate to a flat rate—that objective could be undermined by taking an approach that further complicates things. Such complexity might be as a result of local discretion or the unintended consequences of having a tiered system of flat rates, which could help to address some of the issues to do with it being a less progressive approach than a percentage rate, but could also further complicate matters.

I appreciate that there is a lot of complexity in that answer. I am very keen to hear the considered reflections of the committee in its report, and I will be engaging further with the sector and local government ahead of the stage 1 debate and stage 2.

Revenue that is raised through a visitor levy is not intended to substitute for any other revenue. The revenue that will be raised is to be hypothecated for spend on facilities and services that help and support the visitor economy. That is clearly defined in the legislation. Local authorities have to account for the income separately, they have to publish a report and they have to review the scheme after three years.

Prior to the introduction of a scheme, there is a requirement to set out the proposed scheme’s objectives. The objectives must be consistent with the definition in the bill of supporting the visitor economy. That is clearly set out. If there are particular concerns around the specific wording or the definition that is used by industry, I would want to have discussion and engagement to ensure that there is clarity.

We have sought to be very clear in the bill that revenue that will be raised from the visitor levy is to be accounted for separately, that there must be transparency about how it is spent in terms of intention and reporting, and that decisions on how a scheme is developed—that is, what the specific local objectives will be—will be determined by the local authority through engagement and consultation of accommodation providers, destination management organisations, businesses and communities in their area.

If there are specific concerns around the wording, I am more than happy to hear those, but the clear policy intent is that the revenue will be used to support the visitor economy. That is of paramount importance to me.

Equally, we need to ensure that there is a balance between giving confidence and certainty and recognising the degree of flexibility that is required so that local authorities can respond to the assets and needs of their particular areas.

Again, if there are concerns about any specific aspect of the wording, I am more than happy to have engagement on that to ensure that we have wording that commands the confidence of local government and business.

I recognise the points that have been raised. Clearly, VAT is a reserved tax. At the introduction of the bill, I wrote to the UK Government, which has responded to set out its views, and we have shared that correspondence with the committee. Given that the levy will be locally administered, local authorities that are considering introducing a visitor levy will have to take the VAT issue into account. The bill sets out a requirement to consider the impact of introducing a visitor levy, so local authorities will have to consider that carefully.

That speaks to the importance of the process of consultation and engagement that is required to precede the introduction of a visitor levy. It is a fair and legitimate point that has been raised. Should the bill be passed, it will be for local authorities that are considering introducing a levy to take that into account in their decision making.

First, local authorities routinely consult and engage on a number of issues, and they are best placed to determine how that process is carried out. The levy would be a local government scheme operating within legislation that is determined by Parliament. Ultimately, I imagine that Parliament will take an interest in how it is operating and that future committees will want to explore post-legislative scrutiny of that.

With regard to it being a local power, as I have set out before, there is transparency in the various requirements around consultation and reporting. I imagine that consideration will be given, in particular, to what the stated scheme objectives are for the deployment of revenue generated from a visitor levy, to whether those objectives are met and, if they are met, to what degree. As I touched on earlier, that will inform future iterations of the visitor levy, should a local authority seek to continue it. I imagine that, following the introduction of the levy, business and communities will expect there to be keen interest in continued engagement with local government. Those are obviously matters for individual councils to consider in a way that is consistent with the legislation. However, for that to be a success, it will require collaboration and partnership working, which are inherent in the requirement to consult and engage. From my engagement with local authorities that have expressed an interest in taking forward the visitor levy, I know that there is a strong desire to work in partnership with the communities and businesses that they represent, to ensure that it can be a success.

However, the important thing is to set out clearly, through consultation, what the scheme’s objectives are. Reporting on that will give important data to evaluate and measure specific objectives. Clearly, in addition, over the medium to longer term, further work can be undertaken on the economic impact and analysis can be done of whether those interventions and objectives have proven successful in enhancing the performance of the visitor economy in a particular area. Those matters will be for local authorities to determine, just as all governments routinely review their broader suite of policies.

To be clear, a public consultation will be required. If we make quick progress—depending on the parliamentary timetable for the bill—there might be an opportunity for amendments. However, I do not want to unduly rush the development of a cruise levy proposal, and I would not want it to have any impact on the projected timescales for the eventual legislation.

I think that we both recognise that particular circumstances can arise. However, we are jointly committed to the values that underpin the Verity house agreement, and we want to operate and work in a way—jointly and in partnership—that is consistent with the approach set out in it. That is how we will seek to continue to build on the progress that has already been made, in short order, since the agreement was reached.