Is tourist tax a good idea?

Excessive footfalls are prompting many countries to impose a levy on visitors. Should India consider such a step?

Scotland is the latest country to introduce tourist taxes; it now gives its local authorities the power to introduce a visitor levy in their areas.

Though tourism and trade experts advise caution, Scotland is only joining a growing league of countries like Bhutan, Japan, France, Switzerland, Germany, Italy, Spain, Greece, Belgium, Slovenia, Austria and many more.

Though the forms of these taxes and the methods of collection might be different, the end objective is the same — combat over-tourism and get visitors to pay for the upkeep and maintenance of the public spaces they are visiting.

With many historic cities in India now complaining of the ecological and cultural havoc caused by droves of tourists, would it make sense for India to introduce a similar concept? Metrolife asked around.

‘We already pay too many taxes’

Dipak Deva, managing director, Travel Corporation India, is unequivocal when he says it would be disastrous to have tourist taxes in India.

“We are already paying high GST rates like road taxes, an abnormally high 28 per cent GST on hotels, and more. I don’t think there is scope for any more taxes,” he says.

To combat tourism excess, he says, the government could restrict the number of people allowed to enter an area. “Once the restrictions and timings are announced, people can book their tickets accordingly,” he says.

He also points out that this is not a new concept and is practised globally. “We are talking about overcrowding of our monuments but the numbers are hardly anything compared to the footfalls at the Louvre Museum and Eiffel Tower. The system is quite organised there which is why everything works,” he says.

Can be helpful but should be justified

Tourist taxes in some contexts are beneficial and can add value to the destination, says Vikram Ahuja, founder of Byond Travel, a Bengaluru-based travel group.

He cites the example of Bhutan, which has tourist taxes amounting to 250 dollars a day, among the highest in the world.

“It puts it out of the league of budget destinations but the counter-argument is that without such taxes, Bhutan would not have been able to preserve its local heritage and culture and be the destination it is today,” he says.

But Vikram also stresses the need to justify such taxes and not make them a means to rip off tourists.

He feels a tax to visit some of India’s outdoor gems, from the Himalayan ranges up north to the forests down south, would be a good idea as the revenue generated is used to
preserve the environment and local culture.

Only for foreigners or domestic tourists?

Though the popular feeling is that such extra taxes should only be for foreigners, Vikram feels otherwise.

Most Indian heritage monuments, like the Mysore Palace,
have differential entry charges for foreigners and Indians.

“Given the rise of domestic travel in India and the fact that Indians need to be more mindful of and responsible about what we have while travelling, a tiered tourist tax structure may be our best option. Just like how we see differential entry charges for monuments for locals and outsiders,” he says.

Domestic travellers spend

Daniel D’souza, president and country head, leisure, SOTC Travel, says Indian domestic travellers are becoming more experienced and are willing to spend on new destinations and experience-based holidays.

“Since tourist taxes can generate good revenue which can be utilised for better infrastructure, it would be a good idea to levy it on our cultural and heritage structures that have always attracted travellers from across the country,” he says.

What are tourist taxes?

Tourism taxes are fees typically aimed at overnight visitors. They can be worked into airline tickets or the taxes you pay at your hotel or Airbnb or occasionally, even tour companies.

In Tanzania, the government charges 18 per cent VAT on tourist services like ground transportation, water safaris, and camping fees. In some countries, like Japan, you pay the tax when you leave the country.

The taxes can be adjusted easily for different types of travellers. They are seen as a quick fix to the ill-effects of tourism, which is seen as unsustainable, harmful to the environment and inconvenient for local residents.

There is a popular perception now that the tourism industry generates its profits from places, people and the environment, but gives very little back.

But many industry insiders argue tourism tax is not a long-term answer and the authorities should focus on responsible tourism planning and management.