Why you should expect to pay more tourist taxes – even though the evidence for them is unclear

Rhys ap Gwilym,  Senior Lecturer in Economics, Bangor University 

Linda Osti,  Senior Lecturer in Tourism Management, Bangor University

In April 2024, Venice began its controversial experiment to charge day trippers €5 (£4.30) to visit the city on some of the busiest days of the year. But it’s not just the lagoon city, with its 30 million visitors a year which is interested in trying out new tourism taxes.

In the UK, a council in the county of Kent has recommended introducing a tourism tax on overnight stays in the county. In Scotland, it seems likely that visitors to Edinburgh will be paying a fee by 2026, and the Welsh government plans to introduce similar legislation later this year.

Such taxes may seem new to the UK, but 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.

Pandemic

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.

And it appears that 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.

Complex

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 neighbouring 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 look at 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 centre 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.

Day trippers

For many tourism destinations, the major problem is not overnight tourists, but rather day visitors who use local resources while making little in the way of a financial contribution. For these reasons, taxes might also be used to deter day visits and instead encourage longer stays.

Venice is at the forefront of this shift. And in April 2024, after long discussions between the local authority, residents and business owners, Venice started a trial of a day visitor tax (a so-called “access fee”).

Back in Kent, it may take longer for any such radical plans to come to fruition. In contrast to Scotland and Wales, there are currently no national plans to introduce tourist taxes in England.

This might be considered shortsighted, given the dire need of many destinations in England to improve local infrastructure that tourists rely on, including clean bathing water and public transport. In Manchester and Liverpool, businesses have implemented voluntary overnight charges on visitors, in the absence of the statutory basis to implement compulsory levies.

Many other English towns and cities will probably follow their lead. Tourism taxes are something we might all have to consider budgeting for in our future travel plans, wherever we choose to visit.

This article was first published on The Conversation