Tourism is getting more expensive. In February, Bali incorporated a $10 USD fee (150,000 IDR ) fee for foreigners entering the Indonesian island. Last week, New Zealand formally increased its entry tax to $61 USD (100 NZD).
Taxing tourists is not a new practice. However, as concerns grow over the impacts of tourism on the local environment and communities, tourist taxes will continue to grow.
How are tourists taxed?
Tourist taxes come in two forms.
One-off payments, as the name suggests, are charged once per trip. These payments can be made through official websites, at immigration, or as a fee added to your airfare. For example, Japan charges a $7 USD (1,000 JPY) departure tax through airlines or travel companies.
Daily fees are charged per night spent in a country. This type of tax is usually paid through the hotel or through official immigration websites. Bhutan charges international travelers a Sustainable Development Fee of $100 USD per night.
Are there any exemptions or discounts?
Yes. Some common groups that are exempted from these taxes include travelers who are passing through in transit, air crew, diplomatic travelers, children, and nationals of neighboring countries.
Some countries also give discounts after a certain number of nights to nationals of neighboring countries, or children under a certain age.
Why do countries collect tourist taxes?
Tourist taxes are used in various ways.
Common uses include improving tourism advertising and infrastructure, the general economy, environmental conservation, and cultural preservation. In New Zealand, parts of the tax revenue is being used to support the tourism workforce and also improve conservation practices in multiple national parks.
For popular tourist destinations, however, taxes can deter travelers. This explains Bhutan’s high Sustainable Development Fee, which has helped curb overcrowding. Of the 56,000 total visitors that entered the country in a single month, only 25% were non-Indian nationals.
Venice enforces tourist fees for both reasons. Tourists are only charged anywhere from $1 to $5 USD (1-5 EUR) per night. Day-trip visitors are charged a $5 USD (5 EUR) Visitor Access Fee on peak dates and hours. On a busy day, as many as 120,000 tourists visit the city—double Venice’s population. The revenue made is used to support maintenance and repair of city infrastructure, such as pavements and bridges.
What happens if you don’t pay?
Enforcement measures exist. Venice employs checks at entry points. Fines run as high as $50 to $325 USD (50 to 300 EUR) for non-compliance.
More recently in Bali, it was revealed that only about 40% of international travelers actually pay the tourist tax. Tourism Task Force officers have begun monitoring compliance in popular tourist locations. Additional measures the island’s governor has suggested implementing are a fine or even “a week of imprisonment.”
Bhutan and New Zealand collect the taxes with entry visas, ensuring compliance.
Do they actually work?
To a certain extent.
In the case of New Zealand, revenue from tourist taxes does allow for more investment. The Ministry of Business, Innovation and Employment reported that a total of 86 million NZD of tourist tax has been used to support tourism and conservation projects such as multiple pest management projects within the Te Manahuna mountain ranges. Despite these efforts, the revenue is still not enough: the Ministry of Business estimated “the unfunded costs of international visitors were around $250 million per year”
For Bhutan, tourist taxes did discourage international visitors. However, such deterrence has consequences. Indian nationals are only charged $14 USD (1,200 INR) per day as opposed to $100 USD. In other words, even with 42,000 Indian nationals visiting monthly, $86 less dollars are being made per visitor, which adds up to a loss of over $3 million USD in potential monthly tourism revenue.
Balancing crowd control and tourism revenue is not easy. As tourist numbers increase, popular destinations have to implement more fees to better support the demand. Tourist taxes can be a helpful tool, but no city, nor country, has gotten it quite right—yet.