Shetland Islands Council has been advised not to introduce a visitor levy after a new report concluded that the potential risks outweigh the benefits, citing a high level of opposition from local businesses and concerns over the administrative burden this would impose on accommodation providers.
A recent council report to Shetland councillors advises against adopting the visitor levy, highlighting worries about the impact on the local tourism sector and possible reductions in visitor numbers.
Accommodation providers, who are tipped to shoulder the administrative responsibilities for any new levy, expressed concerns about increased costs, operational complexity, and the risk that some might cease trading if the legislation was introduced. There were also worries about the effect on locals booking overnight stays and issues surrounding VAT.
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Councils across Scotland were granted discretionary powers in September 2024 to introduce a visitor levy on overnight stays, a move intended to generate additional revenue for services and infrastructure used by visitors. Edinburgh, for example, has already set a five per cent levy to start in 2026. However, feedback from consultation sessions in Shetland revealed strong opposition, particularly from local accommodation providers who dominate the area’s tourism landscape. Tourism contributed an estimated £50 million to Shetland’s economy in 2024, with visitors staying on average six nights.
The feasibility report by consultants Urban Foresight recommends that further comparative studies are needed, particularly considering other forms of revenue raising such as cruise levies or point-of-entry fees. There is also a strong recommendation for the council to keep engaging with the Scottish Government over alternative models and discretionary powers before making any final decision.
Shetland’s decision arrives as other island councils, such as the Western Isles, have also paused further development on the visitor levy, preferring to await the outcome of separate consultations on cruise-specific levies. Orkney is likewise reviewing options later this month.
