Addressing the annual conference of the Scottish Tourist Association (STA) yesterday, First Minister Nicola Sturgeon announced that a consultation will take place on the proposed tax, saying the matter deserved ‘careful consideration’.

The STA welcomed the announcement. ‘The STA reiterated its request to the Scottish government last week that an objective, well-informed national debate takes place before any decisions are made on granting local authorities the power to raise additional funds via a transient visitor levy,’ it said in a statement.

The tourism tax has proved controversial with the SNP-dominated Scottish government, along with the Scottish Conservatives, up to now being firmly opposed to its introduction on the grounds that it would damage the hospitality industry.

Conservative culture and tourism spokeswoman Rachael Hamilton said government support for the tax would represent ’a staggering u-turn’, questioning the levy’s effectiveness. 'Tourism businesses and organisations have been quite clear that a tourism tax would reduce Scotland's competitiveness and hurt our economy. The fact is that the tourism tax could well cost more to administer than it will generate, further undermining local authority finances,’ she said.

But Labour has backed the idea, saying it would provide a useful additional revenue stream. Communities spokeswoman Monica Lennon said: ‘The industry generates billions every year - the idea that adding a few pounds to the price of a hotel room would put the industry at risk simply isn't credible. Local services and infrastructure, starved of resources, cannot afford the SNP government to continue dragging its heels on this’.

Meanwhile, Edinburgh City Council has proposed a ‘transient visitor levy’ and is holding a consultation of its own on plans to charge £2 per room, per night, for all types of accommodation which it says this would raise an extra £11m a year on local services ‘to manage the impact of tourism on the city’.

Report by Rob Munro