Tourists currently seem to be the people everybody else loves to hate (at least when they are not travelling themselves). Protests against tourists by residents in destinations such as Barcelona and Venice have spurred local administrations to take less welcoming attitudes towards visitors.
This is not a new trend – Amsterdam has been taking measures to restrict tourism and tame visitor behaviour for many years. But it now seems that continued unrest about the effects of tourism have produced a shift in the ways in which some destinations are dealing with the issue. In particular, the idea of levying or increasing tourism taxes has become more prevalent in recent years. The city of Amsterdam recently raised its tax on staying visitors to 12.5% of the accommodation price, making it the highest tourism tax in Europe. Venice has recently begun a test with taxing day visitors to the city, charging 5 euros a day for those without a hotel room. Edinburgh also announced it would be bringing a ‘transient visitor levy’ of between 5% and 8% in 2026.
Not only is the extension of visitor taxes a new trend in Europe, but the reasons being put forward for doing it are also changing. Some cities, like Venice, have positioned the tax as a means of reducing visitor numbers by making it more expensive for day visitors who usually spend little money in the city anyway. Other cities, like Barcelona, have argued that tourists should help to fund the resources they use, such as cultural attractions or parks.
But there is an interesting shift in the arguments being used by some cities for levying such taxes. For some cities that have already introduced (high) taxes, the experience shows that taxation does not always reach the desired goals. For example, raising the levels of tourist taxes was proposed by the city of Amsterdam as a means of preventing the numbers of staying tourists rising above the 20 million annual limit set by the Municipality. But a recent report commissioned by the Municipality of Amsterdam concluded that a tourist tax is unlikely to have any effect on tourist flows until it reaches about three times current levels. This also matches other academic research that has consistently failed to demonstrate a clear effect of tax on arrivals. The problem is that the taxes are currently only a small fraction of tourist budgets – hence the need for draconian increases if you want to frighten off the tourists.
This probably explains why the provision of services for locals is now given as a main justification for tourist taxes in Amsterdam. The money from the tourist tax goes into the general tax budget, which means it may be used to fund local services, or it may simply plug a hole in the Municipal budget. In the future politicians will probably be under more pressure to show that tourism is improving things for locals by earmarking the funding from the tourist tax. This seems to be the case in Edinburgh, where the tourist levy will be used to improve public parks, fund the city’s festivals and build new social housing. In the past tourism taxes were often invested in tourism promotion (to appease the tourism lobby), but in the case of excess tourism flows this is clearly counterproductive. Signs that this is happening are evident in Barcelona, where a recent proposal to double the current tourist tax level from €4 to €8 a night was accompanied by a discussion about what to spend it on. Rather than investing to ameliorate the negative effects of tourism or improving tourist infrastructure, it was suggested that the funds might be used for air conditioning in schools.
In the past tourists were seen as an easy source of revenue, because they didn’t have a vote. Now the idea seems to be shifting towards the idea that as users of the city, tourists should contribute financially along with residents. In that case, of course, tourists might also start to argue that they should have similar rights to other taxpayers in the city, such as local residents.
The real question is whether taxing tourists produces the desired effects. But there is no guarantee that higher tourist taxes will reduce the tourism pressures on cities. In the case of Amsterdam, the chances are high that as tourists taxes increase, tourists will stay in surrounding cities and travel into the centre of Amsterdam as day visitors. This will mean a potential loss of revenue to Amsterdam, but no overall decrease in visitor pressure on the city. This effect has already been seen in Venice, which was one reason for introducing a tax on day visitors there. Venice could attempt this because the main tourist sites are on islands (even then the experiment doesn’t seem to be working). In a city like Amsterdam, it would be virtually impossible to tax day visitors on entry. A tax on accommodation is therefore one of the few workable options for a tourist tax, but this penalises the staying visitors that the city is keen to attract.
As our friend Stan Ivanov remarked recently – if doubling tourism taxes doesn’t work, just double them again. Eventually you will reach a point where visitor numbers decrease, and there will also be a substantial fund to compensate at least some of the negative effects of falling visitor numbers. Not a very inclusive approach, but it may appease at least some of those complaining about ‘overtourism’.
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