There are more than 60 destinations around the world where this type of tax is already in place. These vary from a nationwide tax in Iceland to various towns across the US. Some have been in place for a long time (France was the first in 1910), but most were introduced during the last decade or two.
Before the pandemic really struck (and tourism was put on hold), 2020 was described by one newspaper as the “year of the tourist tax,” as Amsterdam joined an ever-growing list of destinations, which includes Paris, Malta, and Cancun, to charge visitors for simply visiting.
Introducing these tourist taxes has often been controversial, with industry bodies voicing concerns about the potential impacts on the tourist trade. The link between such levies and visitor numbers is not simple, with several studies reaching different conclusions. For example, some have suggested that tourism levies have hindered international tourism in the Balearics and the Maldives, and that they may dissuade people from participating in domestic tourism.
Yet in one of the world’s most popular tourism spots with a levy, Barcelona, visitor numbers have consistently risen, with hotel guests increasing from 7.1 million in 2013 to 9.5 million in 2019. In fact, the relationship between a visitor levy and tourist flow is so complex that there is no unified view, even within the same country. Italy has been one of the most studied, and results are inconsistent there too. Another study, looking at three neighboring Italian seaside spots, finds that only in one destination has the visitor levy reduced tourist flow. And a study on the Italian cities of Rome, Florence, and Padua shows that these cities have not experienced any negative effects either in terms of domestic or international demand.
So, the impact of tourism taxes on visitor numbers is inconclusive. But what about other effects, such as the potential benefits of spending the revenues raised? As part of an ongoing research project, we looked at seven different destinations in which tourist taxes are levied to see how the money raised is then spent.
For most places, tourism tax revenues were being used to fund marketing and branding – so invested directly into promoting more tourism. The income was also commonly used to fund tourism infrastructure, from public toilets and walking or cycling paths to a multi-billion dollar convention center in Orange County, Florida.
In the Balearics, revenues tend to go to projects that mitigate the negative impacts of tourism on the environment, culture, and society of the islands. These include waste management, conserving natural habitats and historical monuments, and social housing.
But in general, tourism taxes have been implemented successfully across the destinations we looked at, and there is little evidence of tourists being put off from visiting. Research also suggests that when tourists are told what the levy is used for – and when it relates directly to improving their experience or enhancing sustainable tourism – tourists are willing to accept and pay the levy.
