Rising tourist taxes divide Europe

Conservation clashes with competitivity
2024-02-12
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/ Paris
Paris-olympic-games
Rising tourist taxes divide Europe

Citing improvements in public transport in view of upcoming Olympics, Paris has increased tourist taxes by 200 pc

Though it is one of the most-visited parts of the world, travelling to the European Union has increasingly become more expensive as governments, national and local, raise tourist taxes to raise their own revenues but also, promote sustainable travel and in few cases curb over-tourism.
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Since the revival of travel in the post-pandemic period, the European Union has been one of the largest gainers as millions of visitors have headed to the Old Continent in their seemingly relentless thirst for travel.

The number of international tourist arrivals in Europe in 2023 grew by over 17 pc compared to the previous year as more than 700 million international tourists visited the region. Though Europe remains below the 2019 peak of 742 million, when it was the region with the highest number of international tourists worldwide, the recovery since 2022 shows that in 2024, Europe is set to cross the past record arrivals.

What makes the European story exceptional is not just that the rate of recovery has been strong, but the fact that the boom in tourism has come in face of sharply higher costs that are in vague in the post-pandemic travel world, largely driven by higher air and rail fares and far more expensive accommodation, food as well entertainment.

Adding to the price rise that have been led by tourism stakeholders, many European governments, too, have dipped their hands in the pot of gold that tourism represents, raising taxes and now even the visa fees across board.

According to reports, the European Commission has finalised a proposal for raising Schengen Area visa fee by over 12 pc and which is likely to be put in place shortly.

Many airports in the EU area have increased their passenger taxes and some, notably Amsterdam’s Schiphol, are planning to bring in a tax to curb the number of flights that take off and land at what is one of the busiest airports in Europe.

Almost every municipality worth its salt seems to have raised the taxes that tourists pay and some are bringing in new taxes that did not exist earlier.

For some, especially Venice, the reason is clearly that they are unable to deal with over-tourism. The Italian city renowned as one of the most romantic destinations and famed for its gandola rides has been facing massive pollution problems due to overtourism and also drought or poor rainfall in the past few years has impacted its water supplies, leading the city to impose a EUR 5 tax per day on each visitor.

Similarly, in the Atlantic Ocean, visitors to the Portuguese island of Madeira will have to shell out EUR 2 per night, with a maximum charge for seven nights or EUR 14 per stay.

Not surprisingly, perhaps the sharpest increase has been seen in Paris, which is not only the most visited city in the world, but will also host the Olympic Games in six months from now. At the end of last year, the French government sent its hospitality industry up in arms with a 200 pc rise in taxes that tourists pay in the hotels. The rise, which is for 2024, has been ascribed by the government as a plan to raise EUR 200 million to pay for the massive upgradation of public transport that the Greater Paris Region has been witnessing in preparations for he Olympics.

The French hoteliers association sharply criticised the move and rejected the claim that it would raise money for public transport. The hoteliers were angry that the raise was brought in suddenly and at a time when many of the large contracts that hotels normally sign with travel agents for business for the year had already been signed and rates frozen. They said that since they cannot revise the contracts, they will have to bear the higher costs themselves and which they claimed would accrue EUR 423 million in government coffers, more than double of what it was seeking for public transport.

And ironically, much before the government’s last-minute dash to raise resources, the Greater Paris Region had already announced a 100 pc hike in public transport tickets for the duration of the Olympics, again citing the investments made for upgrading the urban transport infrastructure, which incidentally is still on and some projects are certain to miss their target completion dates and where the construction will continue beyond the Olympics.

Similarly, airlines and travel agents have been critical of the plans of the Dutch government to impose new taxes on Schiphol Airport as well as on visiting Amsterdam.

While the governments and local authorities put forth their arguments for raising taxes, businesses are worried that it would hit them and not just in the short-term but the longer run as Europe may find itself going out of favour due to the high costs of travel.

According to tourism stakeholders, excessively high tourist taxes could deter not just short-term visitors but also affluent travellers and students who sometimes transition to long-term residency. Europe would need to ensure its tax policies don’t repel tourists once the post-pandemic boom starts to plateau, something that is forecast for 2025.

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