Councillors voted against developing its plans at this stage after the Federation of Small Businesses (FSB) highlighted worries a local charge might deter visitors and damage the region’s economy.

A public consultation carried out by the council found just one in five respondents supported the proposed 5% charge on overnight accommodation with strong opposition from local businesses.

Argyll & Bute joins Shetland, Orkney, Comhairle nan Eilean Siar (Western Isles) and South Ayrshire in agreeing to stop developing Visitor Levy proposals.

Hisashi Kuboyama, FSB’s West Scotland development manager, said: “We are pleased Argyll & Bute has listened to the concerns of local businesses and decided against pressing ahead with a local Visitor Levy.

“There is no ‘one-size-fits-all’ when it comes to the Visitor Levy, so it is vital that councils carry out a specific assessment of the potential impact in their own area as Argyll & Bute did, and listen and respond to any concerns of local businesses.”

FSB has also highlighted the potential administrative burden for small accommodation providers, such as B&Bs and guesthouses.

It has also highlighted a recent impact assessment commissioned by the Welsh Government, which found a visitor levy could reduce tourist numbers by up to 2.5% and cut visitor spending by as much as £35 million a year.