Tourism Taxes: The New Normal?

By: Kaitlin Allen

Tourism is a huge source of revenue for cities around the world.[1] It is estimated that, globally, tourism accounts for 1 in 10 jobs.[2] However, tourism is not always a positive force.[3]  Tourists have been visiting sites around the globe in historic numbers which has placed a drain on the resources of many countries and led to some cites becoming overrun.[4] In order to combat the large number of visitors, some cities have begun passing new taxes aimed at tourists and day visitors in particular.[5] Many people see these new taxes as necessary to preserve these locations for future generations and to make up for the fact that cities often spend more in resources than tourists contribute to the local economy.[6] Others see these taxes as deterring potential visitors and hurting the economy.[7] Tourism taxes are becoming more prevalent and are likely going to be a new reality for those looking to travel.

Tourism has caused several headaches for countries around the globe.[8] Often times, older cities are not meant to hold the massive amounts of visitors that they now get.[9] The added population can also be extremely draining on the cities’ infrastructure, transportation, and public services such as trash pickup.[10] Locals have now found themselves priced out of housing in areas that have been taken over by Airbnbs, and in some places, areas of cities are now not accessible by residents due to the sheer number of visitors who are present.[11] 

Venice, Italy has been particularly affected by waves of tourism.[12] In 2015, it was estimated that Venice had 50,000 permanent residents while over 30 million tourists would visit the city.[13]  Venice states that the unique nature of its city, given the waterways, increases the infrastructure costs faced by all cities.[14] The city’s risk of flooding has also been increased by the presence of cruise ships, which were only recently banned, and landmarks have been destroyed.[15] Venice recently passed a tourism tax aimed at day visitors.[16] The tax was approved as a part of the Italian government’s budget.[17] The new fee is designed to offset the costs of massive tourism.[18] The tax will be included in the transit fares of those who visit the city, either by bus, train, or cruise ship, and the exact fee will vary based on the time of year.[19]

Tourism taxes are not new in Venice.[20] The new tax expands the existing fee which was aimed at those who spent the night in a hotel in the city.[21] However, those who only took day trips into the city were not subjected to the old tax.[22] The hotel tax brought in an estimated 34 million Euros to the city in 2017.[23] It was estimated in 2018 that of the 24 million people who visited the city, 15 million were just there for the day.[24] The new tax will allow the city to increase the revenue it brings in from tourism.

The implementation of the new tax on tourists is not universally popular.  The Italian Minister of Tourism said the tax was “damaging” and “useless.” [25] There is also concern about the enforcement of the tax.[26] Italians who commute to the island for work are exempt from the fee.[27] Critics have expressed that it will be nearly impossible to sort out those who are exempt from tourists.[28] Some have argued that the tax will not effectively deter visitors and will not reduce the size of the crowds.[29] Others have criticized the new fee as simply a way to create revenue and say that it won’t do anything to solve the problems being experienced by the city.[30]

There is some disagreement as to what the purpose of tourism taxes should be.[31] Some argue that tourism taxes are designed to reduce the amount of visitors by increasing costs.[32] Others argue that the goal is not to reduce the amount of visitors but to raise money to support the added influx of tourists.[33] The Mayor of Venice was adamant that the goal of the tax was not to deter those who wish to visit the city from coming.[34] However, Venice has limited visitors in the past.[35] The city installed checkpoints to keep tourists out of some areas of the city in 2018.[36] The measure was temporary and did not seem to have a large impact on the problem.[37] Tourism taxes have had the effect of deterring visitors in other cities.[38] Amsterdam imposed new taxes on tourists whose cruises docked in Amsterdam in 2019.[39] The new fee was imposed on cruise liners, who passed it on to their patrons.[40] The tax caused multiple cruise liners to remove Amsterdam as a port on their upcoming cruises.[41] Cities who look to curb tourism are going to have to weigh their tactics against the impact it will have on the local economy.[42]

Tourism is valuable.[43] It allows individuals to not only visit different countries but to experience different cultures.[44] It also serves as an important source of revenue for many countries.[45] When it goes unchecked, however, it can cause a lot of problems for locals, infrastructure, and historic sites.[46] In order to combat these issues, cities such as Venice have been looking for ways to control tourism.[47] Taxes on tourists, particularly those who stay for a short time and spend less money,  appear to be an attractive option for many cities that falls short of placing caps on visitors.[48] These types of fees have been popping up all over the world and are likely to continue.[49]

[1] Laurie Jo Miller Farr, Positive & Negative Effects of Tourism, USA Today (Apr. 25, 2018), https://traveltips.usatoday.com/positive-negative-effects-tourism-63336.html.

[2] Id.

[3] Jonathan Tourtellot, Overtourism: too much of a good thing, National Geographic (Dec. 21, 2018),  https://www.nationalgeographic.com/travel/features/overtourism-how-to-make-global-tourism-sustainable/.

[4] Id.

[5] Rosie Spinks, Tourist Destinations Are Trying To Deter “Low Value” Travelers With New Taxes, Quartzy (Feb. 17, 2019), https://qz.com/quartzy/1551505/new-tourist-taxes-from-venice-to-bali-aim-to-curb-overtourism/.

[6] Id.

[7] Lisa Abend, Europe Made Billions from Tourists. Now It’s Turning Them Away, Time (July 26, 2018), http://time.com/5349533/europe-against-tourists/.

[8] See, Tourtellot, supra note 3.

[9] Feargus O’Sullivan, Why Edinburgh Wants a Tourist Tax, CityLab (Feb. 11, 2019), https://www.citylab.com/life/2019/02/edinburgh-scotland-travel-tourism-costs-hotel-tax/582475/.

[10] Id.

[11] See Tourtellot, supra note 3; Abend, supra note 7.

[12] Abend, supra note 7.

[13] Francesca Street, Venice to separate tourists and locals over busy May Day weekend, CNN (Apr. 27, 2018), https://www.cnn.com/travel/article/venice-separates-tourists-and-locals/index.html.

[14] Nick Squires, Venice to introduce visitor tax in latest bid to manage the impact of mass tourism, The Telegraph (Dec. 31, 2018), https://www.telegraph.co.uk/news/2018/12/31/venice-introduce-visitor-tax-latest-bid-manage-impact-mass-tourism/.

[15] How Mass Tourism Is Destroying 30+ Destinations Travelers Love, Green Global Travel, https://greenglobaltravel.com/how-mass-tourism-is-destroying-destinations/#TOURISM%20IN%20EUROPE (last visited Apr. 14, 2019).

[16] Venice to introduce visitor tax, supra note 14.

[17] Jeri Clausing, Critics call Venice tourist tax a money grab, Travel Weekly (Jan. 03, 2019), https://www.travelweekly.com/Europe-Travel/Critics-call-Venice-tourist-tax-a-money-grab.

[18] Venice to introduce visitor tax, supra note 14.

[19] Id.

[20] Id.

[21] Id.

[22] Id.

[23] Id.

[24] Id.

[25] Nick Squires, Venice Tourist Tax to Be Introduced in May but Criticized by Italian Minister as ‘Useless and Damaging, Travel Agent Central (Feb. 5, 2019), https://www.travelagentcentral.com/destinations/venice-tourist-tax-to-be-introduced-may-but-criticised-by-italian-minister-as-useless; Clausing, supra note 17.

[26] Clausing, supra note 17.

[27] Venice Tourist Tax to Be Introduced in May, supra note 25.

[28] Clausing, supra note 17.

[29] O’Sullivan, supra note 9; Clausing supra note 17.

[30] Clausing, supra note 17.

[31] Spinks, supra note 5.

[32] Id.

[33] Id.

[34] Venice Tourist Tax to Be Introduced in May, supra note 25.

[35] Street, supra note 13.

[36] Id.

[37] Feargus O’Sullivan, Venice Erects Gates Against a Flood of Tourists, CityLab (May 1, 2018), https://www.citylab.com/life/2018/05/venice-erects-gates-against-a-flood-of-tourists/559367/; Clausing, supra note 17.

[38] Emma Featherstone, Cruise line ditch Amsterdam after passengers targeted by new taxes, The Telegraph (Jan. 9, 2019), https://www.telegraph.co.uk/travel/cruises/news/how-new-tourist-taxes-are-targeting-cruise-passengers/.

[39] Id.

[40] Id.

[41] Id.

[42] Venice to ban large cruise ships from Grand Canal, BBC (Nov. 8, 2017), https://www.bbc.com/news/world-europe-41914262.

[43] Farr, supra note 1.

[44] Id.

[45] Abend, supra note 7.

[46] Tourtellout, supra note 3.

[47] Venice to introduce visitor tax, supra note 14.

[48] Id.

[49] See Spinks, supra note 5.

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