Planning a trip to Europe? Amsterdam, Barcelona lead tourist tax rise

The Croatian city of Dubrovnik has long imposed an accommodation tax on visitors. More recently, the government began charging a cruise ship tax. Photo / Andy Haslam; The New York Times

When Hester Van Buren, a deputy mayor of Amsterdam, recently proposed a 1% increase in the city’s tourist accommodation tax – which is among the highest in Europe – her City Council colleagues responded with a single criticism: They wanted the increase to be even bigger.

“We have a lot of costs for the city, of course – for well-being, for liveability,” Van Buren said in a recent interview at Amsterdam’s City Hall. “We don’t want to increase the taxes for our inhabitants. So we said, ‘Well, let the visitors pay some more.’”

Across Europe, many of Van Buren’s counterparts are having similar thoughts. After several years of steady growth in urban tourism leading up to the pandemic, many European cities have found new ways to tax visitors, who are at once an important source of revenue and – in some cases – a cause of headaches for residents.

And while there’s little evidence that tourist taxes do much to dampen visitor demand, the measures can raise significant funds for street cleaning, roadwork and other urban improvements that benefit visitors and locals alike.

Amid growing concerns about the negative impacts of tourist crowds, revenue generated from tourism taxes can help ensure that this important slice of many European economies maintains its social license to operate.

“The big question that’s on the mind of many local communities is ‘How can we capture the value of tourism?’ " said Peter Rømer Hansen, a founding partner and chief strategist at Group NAO, a Copenhagen-based tourism consulting agency. “Back in the day, it used to be that tourism was tax-free. Now it’s like, ‘No it’s not – you should tax tourism to capture some of that value to add to the community.’ It’s a paradigm shift.”

The tourism ‘zeitgeist’

Tourism taxes are now widespread in Europe: Of the 30 nations surveyed in a 2020 report, of which Hansen was the lead author, 21 had taxes on tourist accommodations, usually in the range of .50 to 3 euros (about 90 cents to $5.40) per person per night. (In the United States, most states impose single-digit-percentage taxes on accommodations, but this varies widely – from zero tax on lodging in Alaska and California to a 15% hotel tax in Connecticut.)

Nations in southern and western Europe, where tourism tends to represent a larger share of the national economies, are more likely to have tourism taxes, Hansen said. But he expects northern European countries will soon impose similar levies, driven by factors including the climate crisis, the post-pandemic tourism surge and a growing interest in making tourism work for local communities.

“It’s part of this zeitgeist that we need to be more conscious and take better care of our local environment,” Hansen said.

In line with that trend, some European destinations that have long imposed tourism taxes have begun to increase their rates or impose additional levies.

Last year, the Barcelona City Council began imposing a “city surcharge” on visitors, over and above the accommodation tax (from 1 to 3.50 euros per night, $1.80 to $6.30), which the government of Catalonia established in 2012. Barcelona’s new charge – which applies both to tourist stays and cruise visitors – is scheduled to rise to 3.25 from 2.75 euros on April 1 next year, said Jordi Valls, the City Council’s deputy mayor for tourism. This year’s surcharge is expected to generate 52 million euros, money that will be set aside for spending on public spaces and environmental protection, and to pay for the enforcement of laws regulating tourist rentals, among other activities.

It’s a similar story in the Croatian city of Dubrovnik – which, according to one index, had the highest ratio of tourists to residents of any European city in 2019. Dubrovnik has long imposed an accommodation tax, which now stands at 2.65 euros ($4.77) per person per night from April through September, dropping to 1.86 euros ($3.35) the rest of the year. But in 2019, the government announced a tax on cruise ships as well, after what the city’s mayor, Mato Frankovic, called “a very hectic situation.”

“The question from many of our inhabitants was, ‘What do we get from those cruise ships? They are not paying anything to the city of Dubrovnik,’” Frankovic said, adding that the cruise tax, which took effect in 2021, is expected to raise 750,000 euros ($1,350,243) this year, funds that will be spent to improve roads in the city. The mayor described the cruise tax as “a win-win.”

“The cruise companies and the cruise guests know where the money they pay is actually invested,” Frankovic said, “and the citizens of Dubrovnik clearly see the benefit of the cruise business.”

Last year, the Barcelona City Council began imposing a “city surcharge” on visitors, over and above the accommodation tax. The new charge — which applies both to tourist stays and cruise visitors — is scheduled to rise to €3.25 from €2.75 on April 1 next year. Photo / Samuel Aranda; The New York Times

Sharing the costs of running a city

In Amsterdam, where tourist taxes are expected to generate 185 million euros (over $333 million) this year, such benefits are perhaps even more evident. The city imposes two taxes: an accommodation tax, which has been in place since 1973, as well as a cruise tax, which was introduced in 2019. (The City Council recently adopted a proposal to ban cruise ships from Amsterdam’s ports. However, the measure isn’t expected to take effect until next year, at the earliest.)

The funds raised from both taxes are used to improve public spaces in parts of the city that attract few tourists, Van Buren said. In that way, she added, the tax ensures that people across Amsterdam enjoy the fruits of tourism.

Amsterdam’s accommodation tax now stands at 7% of the cost of accommodation for hotel stays, plus a flat fee of 3 euros ($5.40) per person per night. (Guests in short-term apartment rentals, which the city strictly regulates, pay a tax of 10% per night.) The City Council will meet in October to decide whether – and by how much – to increase the tax, which was most recently raised in 2018.

Van Buren believes there is support for an increase. She noted that Amsterdam residents paid 172 million euros (about $309 million) just for trash collection and street cleaning last year, including in areas popular with tourists. It’s only fair, she said, to ask visitors to share the costs of keeping the city functioning.

She described the city’s tourism taxes as part of a package of measures intended to limit tourism growth in Amsterdam, which stopped marketing itself as a destination several years before the pandemic. But Van Buren acknowledged that the accommodation tax appeared to have only a slight dampening effect on visitor interest, a conclusion supported by Hansen’s 2020 report.

That doesn’t mean that taxes aren’t helping to shape tourism in the city. The extra charge of 3 euros per night was intended to ensure the measure would be felt by Amsterdam’s cheap hotels and the low-budget tourists who frequent them, Van Buren said, adding that such visitors, who often come for bachelor parties and the like, bring “a lot of problems.”

On that front, it seems the measure is having the desired effect. Henriette Zwart, owner of Hotel Koffiehuis Voyagers, a lower-budget accommodation option in Amsterdam’s historic center, said the tourist tax had forced her to renovate so she could charge enough to cover her operating costs. She used to charge 100 euros ($180) per night for a room that could sleep three or four people, but when her hotel reopens after renovations in October, she will charge 200 euros ($360) for a room that can sleep only two.

“We look at the prices in this area, and everybody’s got high prices like that,” Zwart said.

“They don’t want the low-value tourist. They want the upper-class tourists, which is pretty discriminative,” she said of the city leaders. “If you have a low-cost per person and a high tourist tax, then it’s almost not even motivating to run a business like that.”

More Taxes Coming

Other major European tourist destinations, including Edinburgh, are considering new visitor charges.

This year, Manchester became the first British city to adopt a visitor fee when local hotel owners collectively began to impose an additional charge of 1 pound (roughly $2) per person per night. British cities don’t have the power to create the kinds of taxes that Amsterdam and Barcelona have introduced, said Bev Craig, leader of Manchester City Council, so businesses introduced the charge themselves, with the support of local government.

The resulting funds will be used to clean the streets, run targeted tourism campaigns and prepare bids for major events that will attract even more tourists to Manchester, said Craig, who added that tourism has become a major employer.

“We think about the role tourism has in our city — be it for football, culture or history — and actually we want to grow that,” Craig said.

It’s a different story in St. Ives, a picturesque English coastal town that has been attracting tourists for more than a century. But growing crowds of visitors have begun to strain the town’s services and the patience of its residents, Mayor Johnnie Wells said. Wells noted that St. Ives spends nearly one-fifth of its annual budget — about 200,000 pounds — just on cleaning the town’s eight public toilet facilities, which visitors use much more than locals.

Facing the same taxing constraints as Manchester, the local council has decided to charge visitors 40 pence to use the toilets. Local leaders are also considering a “community charge” similar to the visitor charge imposed in Manchester.

Wells stressed that tourism is a huge part of the economy of Cornwall, the southwestern English county that is home to St. Ives and dozens of other popular seaside communities. The area used to rely on mining and fishing, but as those industries have fallen away, tourism has become an increasingly important source of jobs and income.

“People always moan about the holiday industry, but it’s what we Cornish folk do,” Wells said, adding that residents’ frustration with tourists “is becoming an issue.” But he thinks a visitor charge, if they can pull it off, would be a positive step.

“If locals can feel that their town is being improved because the tourists are coming, it’s going to help bridge that gap and create a bit better feeling between the two,” he said.

This article originally appeared in The New York Times.

Written by: Paige McClanahan

Photographs by: Andy Haslam and Samuel Aranda

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