The Scottish Government will introduce a new Bill to allow councils to institute a flat rate visitor levy.

Local authorities currently have the power to implement a so-called tourist tax on visitors to the area, but can only do so as a percentage of the cost of stays in hotels and other forms of accommodation.

But public finance minister Ivan McKee announced on Tuesday a Bill would be lodged in the new year to allow for a flat fee to be introduced, in the hopes it would pass before the end of the parliamentary term in March.

In a statement, the minister said: “The visitor levy empowers councils by giving them a new way to raise money for investment in tourist services and facilities.

“Our aim has been to give councils the flexibility to design a levy that works for their areas, while ensuring businesses can easily understand what it means for them.

“The Act passed last year was an example of partnership working between the Scottish Government, local government and tourism businesses.

“Through regular discussions with our partners, it became clear that further flexibility would be welcomed.

“That is why we have decided to legislate next year, to ensure local visitor levies work effectively for everyone.”

Scottish Tory economy spokesman Murdo Fraser said that while it was a “relief” the Government had “finally listened” to calls for the flat rate, the levy would still hurt local economies.

“Whilst that is an improvement, this legislation is still going to impose enormous costs on, and damage to, a sector of the economy which is already struggling with too high a cost base,” he said.

“The introduction of the SNP’s visitor levy has been handled in the most cack-handed fashion, with no real assessment of its impact, no clarity about how it will be collected, and a series of farcical U-turns about what powers councils would have.

“This announcement finally confirms the flexibility to set a flat rate on the visitor levy, but it won’t alter the extra costs and red tape being imposed on businesses and travellers – including Scots moving around the country for work or family reasons – or provide any assurance that these funds will benefit local communities.”

Marc Crothall, the chief executive of the Scottish Tourism Alliance, said the move showed the Government’s willingness to “act on feedback from business” as he pushed for councils to pause their plans for a tourist tax.

“It will overall be easier and less costly for accommodation providers and local authorities to administer, and importantly more transparent for our visitors,” Mr Crothall said.

“We now look forward to working constructively in partnership with the Scottish Government to deliver meaningful reform of the visitor levy charging model, which we have championed from the very start.

“In the meantime, we urge all local authorities to consider pausing any plans for a visitor levy scheme as this plays out in the Scottish Parliament over the next few months. Change is coming just down the line.”

UKHospitality Scotland executive director Leon Thompson said the current legislation is “unworkable” and welcomed the Scottish Government’s “pragmatic” approach.