When Amsterdam Deputy Mayor Hester Van Buren recently proposed a 1 percentage point increase in the city’s tourist accommodation tax (already among the highest in Europe), her city council colleagues had only one criticism: answered. Even bigger.
“It’s a huge cost for the city, of course, but also for welfare and livability,” Van Buuren said in a recent interview at Amsterdam City Hall. “We’re not going to increase residents’ taxes. So we said, ‘Let’s make visitors pay a little more.'”
Many of Van Buren’s colleagues across Europe have similar ideas. While urban tourism has continued to grow steadily in the years leading up to the pandemic, many European cities have struggled to attract visitors who are both an important source of income and, in some cases, a headache for residents. Found a new way to tax.
There is also little evidence that tourism taxes have a significant effect on suppressing tourist demand, but the measure does allow for street cleaning, roadworks, and other urban improvements that benefit both tourists and local residents. There is a possibility that a large amount of funds can be raised.
At a time of growing concern about the negative impacts of tourist crowding, revenue generated from tourism taxes will help important parts of many European economies maintain their social license to operate.
Peter Römer Hansen, founding partner and chief strategist at Copenhagen-based tourism consultancy Group NAO, said: “The big question for many communities is: ‘How can we capture the value of tourism?’ ” he says. “In the old days, tourism wasn’t taxed. Now we’re saying, ‘No, that’s not true. We should tax tourism to capture some of the value it adds to the community.’ It will be. It’s a paradigm shift. ”
Tourism “zeitgeist”
Tourism taxes are now widespread in Europe. Of the 30 countries surveyed in the 2020 report, of which Hansen was the lead author, 21 impose taxes on tourist accommodation, typically ranging from 0.50 euros to 3 euros (about 55 cents). It was imposed. $3.30 per person per night). (In the United States, most states impose a single-digit percentage tax on lodging properties, but they range from zero lodging tax in Alaska and California to a 15 percent hotel tax in Connecticut. )
Mr Hansen said countries in southern and western Europe, where tourism tends to make up a larger share of the national economy, were more likely to impose a tourism tax. But he expects Nordic countries will soon impose similar taxes due to factors such as the climate crisis, a post-pandemic surge in tourism, and growing interest in using tourism to benefit local communities. There is.
“It’s part of this zeitgeist that we need to be more conscious and take better care of our local environment,” Hansen said.
In line with this trend, some European destinations that have long levied tourism taxes are starting to increase tax rates or impose additional surcharges.
Last year, Barcelona’s city council began charging visitors a “city surcharge” on top of the accommodation tax (ranging from 1 euro to 3.50 euros per night) enacted by the Catalan government in 2012. Barcelona’s new rates apply to both. According to Jordi Valls, the city council’s deputy mayor for tourism, the fee for tourist stays and cruise passengers will increase from 2.75 euros to 3.25 euros from April 1 next year. This year’s levy is expected to generate 52 million euros, which will be used for activities such as spending on public spaces and environmental protection and enforcing laws regulating tourist rentals.
The same can be said for the city of Dubrovnik in Croatia. According to one indicator, Dubrovnik had the highest ratio of tourists to residents among European cities in 2019. Dubrovnik has long had an accommodation tax, which currently stands at 2.65 euros per person. At night from April to September, during the rest of the year it drops to 1.86 euros. But in 2019, after what Mayor Mato Frankovic described as a “very busy situation,” the government announced it would also tax cruise ships.
“The question from many residents was, ‘What do we get from cruise ships?’ They are not paying anything to the city of Dubrovnik,” Frankovic said, adding that the cruise tax that took effect in 2021 It is expected to raise 750,000 euros this year, which will be used to improve roads in the city, he added. . The mayor called the cruise tax “a win-win.”
“Cruise companies and cruise passengers know where the money they pay is actually invested, and the residents of Dubrovnik clearly understand the benefits of the cruise business,” Frankovic said.
Share the costs of running a city
Such benefits are perhaps even more obvious in Amsterdam, where tourism taxes are expected to generate €185 million this year. The city imposes two taxes on him. The lodging tax has been in effect since 1973, and the cruise tax was introduced in 2019. (The City Council recently adopted a proposal to ban cruise ships from Amsterdam’s port. However, the measure is not expected to come into force until next year at the earliest.)
Funds raised from both taxes will be used to improve public spaces in less-visited areas of the city, Van Buren said. In this way, the tax will ensure that people across Amsterdam enjoy the fruits of tourism, she added.
Accommodation tax in Amsterdam is currently 7% of the cost of a hotel stay, plus a flat fee of 3 euros per person per night. (Guests in short-term rentals of apartments, which the city strictly regulates, pay a 10% tax per night.) The City Council is scheduled to meet in October to decide whether to raise taxes and by how much. be. Raised in 2018.
Van Buren believes there is support for the increase. He pointed out that Amsterdam residents paid €172 million last year alone for garbage collection and street cleaning, including in areas popular with tourists. She says it makes sense to ask visitors to pay for the costs of keeping a city functioning.
She explained that the city’s tourism tax is part of a series of measures aimed at limiting the growth of tourism in Amsterdam, which stopped promoting itself as a destination several years before the pandemic. However, Van Buren acknowledged that lodging taxes appear to have only a marginal effect on dampening tourist interest, a conclusion supported by Hansen’s 2020 report.
That doesn’t mean taxes don’t help shape tourism in the city. The extra charge of 3 euros per night is intended to ensure that the measure is felt by Amsterdam’s cheap hotels and the low-budget tourists who frequent them, Van Buren said. He added that such travelers often come for bachelor parties and weddings. For example, it brings “many problems”.
In that respect, this measure appears to be having the desired effect. Henriette Zwart, owner of the Hotel Coffiehaus Voyager, a budget accommodation in Amsterdam’s historic center, has decided not to renovate it so that she can charge enough to cover her operating costs through tourist tax. He said he was forced to do so. Previously he was charging 100 euros per night for a room that could accommodate 3 or 4 people, but once the hotel reopened in October after renovations, he charged 100 euros per night for a room that could accommodate only 2 people. We plan to charge 200 euros.
“We’re looking at prices in this area, and they’re all that expensive,” Zwart said.
“They don’t want low-value tourists. They want upper-class tourists, which is pretty discriminatory,” she said of city leaders. “With low per capita costs and high tourism taxes, there is little incentive to even run such a business.”
More taxes are coming
Other major European tourist destinations, including Edinburgh, are considering new visitor fees.
This year, Manchester became the first British city to introduce a visitor fee when local hotel owners collectively began charging an extra £1 (about $1.27) per person per night. Bev Craig, leader of Manchester City Council, said businesses introduced the tax themselves with support from local government because British cities did not have the power to create a tax like those introduced by Amsterdam and Barcelona.
Mr Craig said the money raised would be used to clean streets, deliver targeted tourism campaigns and prepare bids for major events to attract more visitors to Manchester, with tourism a key employer. He added that he is the lord.
“We’re thinking about the role that tourism plays in our city, whether it’s football, culture or history, and we really want to grow that,” Craig said.
It’s a different story in St Ives, a picturesque English coastal town that has attracted tourists for more than a century. But the increase in tourists is starting to strain the town’s services and residents’ patience, Mayor Johnny Wells said. Mr Wells said St Ives would spend almost a fifth of its annual budget – around £200,000 – just cleaning the town’s eight public toilet facilities, which are used far more by tourists than locals. He pointed out that he was spending.
The local council, which faces similar tax restrictions to Manchester, has decided to charge visitors 40p to use the toilets. Local leaders are also considering a “community charge” similar to the visitor charge levied in Manchester.
Mr Wells highlighted that tourism was a big part of the economy of Cornwall, south-west England, home to St Ives and dozens of other popular seaside communities. The region once relied on mining and fishing, but as these industries have declined, tourism has become an increasingly important source of employment and income.
“People always moan about the holiday industry, but that’s what we Cornish people do,” Mr Wells said, adding that residents’ complaints about tourists were “becoming an issue”. But he believes the visitor fee, if successful, could be a positive step.
“If the locals can feel that their town is improving with the arrival of tourists, then we can bridge that gap and create a little more good feeling between the two parties,” he says. .
Paige McClanahan, a regular contributor to the Travel section, is writing a book about the tourism industry.
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