Hester Van Buren, the deputy mayor of Amsterdam, recently proposed a 1 percent increase to the city’s tourist accommodation tax. However, her City Council colleagues wanted an even bigger increase. This reflects a growing trend among European cities to tax visitors as a means of generating revenue for urban improvements. Despite concerns about the impact of tourist crowds, there is little evidence that these taxes dampen visitor demand. Instead, they provide funds for initiatives such as street cleaning and roadwork that benefit both visitors and locals.
Tourism taxes are now common across Europe, with 21 out of 30 surveyed nations implementing taxes on tourist accommodations. These taxes usually range from .50 to 3 euros per person per night. Southern and western European countries, where tourism represents a larger share of the national economy, are more likely to have such taxes. However, it is expected that northern European countries will soon follow suit.
Destinations that have already implemented tourism taxes are now increasing rates or adding additional levies. For example, Barcelona introduced a “city surcharge” on top of the existing accommodation tax to fund public spaces and environmental protection. Similarly, Dubrovnik in Croatia imposed a cruise tax to improve city roads.
Amsterdam, which is expected to generate €185 million from tourist taxes this year, uses the funds to improve public spaces in non-touristy areas. The accommodation tax in Amsterdam is currently 7 percent of the cost of accommodation for hotel stays, with a flat fee of €3 per person per night. The City Council is considering another tax increase in October. The tax has had only a slight impact on visitor interest but is part of a larger effort to limit tourism growth in the city.
While taxes may not significantly affect tourism demand, they do shape the kind of tourists a city attracts. In Amsterdam, the €3 per night charge was aimed at budget hotels and low-budget tourists who bring various problems. However, some hotel owners feel that high taxes and low prices per person discourage business.
Other European destinations, like Edinburgh, are considering implementing visitor charges, and Manchester has already introduced a £1 per person per night visitor fee to fund street cleaning, tourism campaigns, and event bids.
Overall, tourist taxes provide a means for cities to capture the value of tourism and finance urban improvements while addressing concerns about the negative impacts of excessive tourism.
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