Friday 19 July 2019

Duty bound: Is it time to tax Ireland's tourists?

Amid rising concerns about overcrowding in tourism hotspots around the globe, many cities now impose a tax on visitors. Though it faces stiff opposition from an industry still reeling from the VAT rate restoration, is it time we followed suit, asks Kim Bielenberg

St Patrick's Day crowds in Dublin's Temple Bar
St Patrick's Day crowds in Dublin's Temple Bar
Cruise control: Niamh McCarthy, managing director of Excursions Ireland, says a tourism tax would be detrimental to Dublin. Photo by Gerry Mooney
Besieged cities: John Gibbons from An Taisce backs a tourism tax. Photo: Gerry Mooney
Brandenberg Gate in Berlin
La Sagrada Familia in Barcelona
Kim Bielenberg

Kim Bielenberg

At times, the streets of Dublin city centre are so crowded with tourists that it is difficult for ordinary city-dwellers to move around.

Up to six million people are visiting the capital every year. Many throng the pubs of Temple Bar, mill around Trinity College and visit the Guinness Storehouse as tourist buses line up, bumper to bumper, along Nassau Street.

In other European cities, tourists pay a tax to cover the costs of some of the services they use when they are visiting - and many of these charges are increasing. So, is it time to impose a similar charge here?

As one tourism commentator puts it, destinations around the world are now raising more tourist taxes than a medieval king preparing to go to war.

Where once tourists were considered a blessing, now in some places they are considered a curse who should be forced to cough up some of their hard-earned holiday money almost as soon as they unpack their bags. Dublin may not have reached that stage yet, but at times the crowds can become overbearing.

Visitors may bring in welcome revenue to a city, but the hordes of visitors can also come with costs. Their occupation of Airbnb-style short-let properties pushes up rents, they produce rubbish that has to be collected from litter bins, and they have access to parks, galleries and museums, paid for by the taxpayer. They may use subsidised public transport.

Besieged cities: John Gibbons from An Taisce backs a tourism tax. Photo: Gerry Mooney
Besieged cities: John Gibbons from An Taisce backs a tourism tax. Photo: Gerry Mooney

In Dublin, although tourists pay VAT in hotels and restaurants just as the locals do, they are not covered by a specific tax. In allowing visitors to stay without a tourist tax, the capital is in the minority among leading European cities.

Edinburgh is facing some of the same pressures as Dublin with Airbnb-style apartments pushing up rents and colonising parts of the city centre.

The Scottish capital recently voted for a Transient Visitor Levy to help pay for the costs of mass tourism, and the charge is awaiting approval from Nicola Sturgeon's government. Proposals include a £2 (€2.25)-per-night charge added to the price of any room for the first week of a stay. It would apply to all accommodation, including hotels and short-term lets.

In Paris, visitors pay up to €5 each per night to stay, depending on the quality of the accommodation, while in Rome the charge varies from €3 to €7 per night per person in hotels. Tourism taxes are also commonplace in German cities, and in Berlin, a 5pc tax is added on to every accommodation bill.

In a growing number of cities it is not just overnight visitors who are being hit with levies for the pleasure of being there. They are also slapping charges on day trippers, and those who arrive by cruise ship.

Cruise tax

While there is no levy on the 400,000 passengers on the huge ships that cruise into Dublin each year, other major ports have introduced taxes.

Venice recently announced a daily charge of up to €10 per head, which would be added to a cruise passenger's ticket price, and there are charges also in Amsterdam and Barcelona, where patience with the sheer numbers of visitors seem to be wearing thin.

Tourism industry interests here are likely to fight any attempt to introduce extra charges tooth and nail. They believe that they already suffered a hit with the restoration of the VAT rate to 13.5pc, and they warn that this could turn out to be a difficult year with the looming threat of a hard Brexit. While any attempt to introduce a levy will meet stiff resistance, Dublin City University Economics Professor Edgar Morgenroth believes that a local tourism levy makes sense, and could not only be introduced in Dublin but also widened out to include other tourist hotspots such as Galway and Killarney.

Cruise control: Niamh McCarthy, managing director of Excursions Ireland, says a tourism tax would be detrimental to Dublin. Photo by Gerry Mooney
Cruise control: Niamh McCarthy, managing director of Excursions Ireland, says a tourism tax would be detrimental to Dublin. Photo by Gerry Mooney

"It is a totally normal tax in Germany and Austria, and is used to pay for local facilities that can benefit local people and make an area more attractive to visitors," says Professor Morgenroth.

He says even small towns in Austria have good facilities, including 50-metre swimming pools, which are paid for by these taxes. According to Morgenroth, Dublin could benefit from a tourist tax with improved amenities.

"The amounts paid in tourism taxes are usually very small, but they can make a difference to a city."

Authorities in Edinburgh estimate that their proposed tax of €2.25 per night could raise more than €16m a year.

If a similar levy was raised here, it could fund street cleaning and park management, and go towards the care and maintenance of the historic buildings and other free attractions visitors come to see.

One suggestion is that a small visitor levy could help fund a tourism-related project such as the Metrolink with Dublin Airport.

Eoghan O'Mara Walsh of the Irish Tourism Industry Confederation says local authorities currently don't have the powers to levy tourism taxes.

"We do not think a tourism tax would be a good idea, as it would damage our competitiveness at a time that the industry is dealing with the VAT hike as well as an enormous Brexit challenge. Government must do more to support Ireland's largest indigenous industry, particularly at this critical time."

Unarguable case

O'Mara Walsh argues that the industry is already a heavily taxed sector, with Fáilte Ireland estimating that 23 cent out of every euro spent on tourism going back in taxes.

Sarah Costigan, who run the Little Museum of Dublin, agrees.

"While a tourism tax might be viable, I'm not sure about the timing, as the VAT rate went up recently and the industry will hardly welcome extra costs just now," she tells Review.

Frank McDonald, chairman of the Temple Bar Residents' Association, takes a different view and says the crowds in Dublin are so great that there is an unarguable case for a tourist tax, similar to those in other European cities.

Residents in Temple Bar have long complained about late-night drunkenness, rowdy behaviour and the proliferation of apartments let to tourists on a short-term basis.

Some of the problems were highlighted in a recent EU report on overtourism across member states.

Among the issues highlighted in the report were physical overcrowding, which creates dissatisfaction among tourists and residents, uncivilised behaviour, the feeling among residents of living in a theme park and a rise in the cost of living as a result of a hike in rental costs.

"It is hard to believe that they want to double the number of tourists coming to Dublin," says Frank McDonald, "The city centre is quite small and doesn't have the capacity to take those numbers."

McDonald says a tourist tax would be viable in Dublin when one considers the extortionate rates that are being charged for rooms.

In some heavily touristed parts of Europe, the authorities have linked their taxes with environmental sustainability.

On Majorca and other Balearic Islands, each visitor pays a Tax for Sustainable Tourism, which was last year doubled to €4 per day during peak times.

The authorities have had to take measures to tackle chronic traffic problems, sea pollution caused by sewage and water shortages.

The geographer and environmentalist Gerald Hau told Review: "The original aim of the tax was ecological and it was supposed to be used for nature conservation. But recently it has been used for more general purposes."

'Flight shame'

While city authorities impose taxes on the ground, the next big imposition on tourists is likely to come from airline taxes amid mounting concern about aviation's contribution to climate change. There is also common agreement that some of the problems of overcrowding in tourism hotspots are linked to cheap air travel.

Sweden recently introduced a departure tax on airline passengers of between €6 and €39 per passenger, as "flight shame" becomes a phenomenon in the birthplace of teenage climate-change activist Greta Thunberg.

There are similar moves to impose taxes on flights in the Netherlands.

The Dutch government has pledged to introduce a €7 levy per air passenger in 2021 if the EU does not manage to set up a pan-European tax.

John Gibbons, a member of An Taisce's climate change committee, supports the imposition of taxes on flights, including a tax on aviation fuel.

Gibbons, who also backs city tourism taxes, says: "There are cities in Europe that are now besieged by visitors and it seems perfectly reasonable that they should pay their way for the services they use. Why should you pay a charge in Paris, but not here?"

The environmentalist says any tourism tax should cover cruise ships, which create environmental pollution and bring limited benefits to cities, because passengers are not staying in hotels.

Any move to tax cruise-ship passengers or impose a city tourism tax is opposed by Niamh McCarthy, managing director of Excursions Ireland, a leading provider of ground services for cruise ships visiting Ireland.

McCarthy, who organises trips for passengers to attractions such as Trinity College and Powerscourt, says: "Any tourism tax would be detrimental to Dublin. In Amsterdam, they imposed a charge, and some ships have stopped going there, and they now stop in Rotterdam instead.

"These are movable assets, and they can just move on somewhere else. We are already viewed as an expensive capital city. There is a real danger that we could just price ourselves out of the market."

The tourism industry fears a dent to its profits from a city tax, warning that we should not make Dublin too expensive. But that never stopped hoteliers and restaurateurs hiking prices when they saw an opportunity. Supporters of a tax say visitors would hardly notice a levy that could cost less than the price of a cup of coffee.

Visitor levies:  What you pay across Europe

VENICE

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Venice, Italy

The Italian city recently announced that it will impose a tourist tax on day-trippers, including those who arrive by cruise ship. The tourist tax will be a €3 fee from September 1 for those who are not staying in the city. The charge will rise to as much as €10 at peak times next year. Those staying in the city pay a tourist tax of €3.50 to €5 per night.

PARIS

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No matter how many times you visit Paris, this extraordinary city still has the capacity to surprise and captivate

Visitors to France pay a 'Taxe de Séjour', or tourist tax, which is charged per person, per night and varies according to the quality and standard of the accommodation. In Paris, the prices range from just 25 cent per night for the simplest campsite to €5 for the most luxurious accommodation.

AMSTERDAM

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Amsterdam. Photo: iStock/PA.

The tourist tax in the popular Dutch city is 7pc of the cost of the room. The tax applies to all providers of tourist accommodation. Cruise-ship passengers now have to pay €8 per passenger.

MAJORCA

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Spain, Mallorca

The Balearic Islands of Majorca, Ibiza, Menorca and Formentera recently doubled their charge, known as the Tax for Sustainable Tourism. During peak tourist season, the islands levy a tax of up to €4 per person, per day, on all visitors to the island, including those arriving by cruise ship.

BARCELONA

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La Sagrada Familia in Barcelona

Tourists staying overnight have to pay a charge ranging from 65 cent for a campsite up to €2.25 for a private apartment or five-star hotel. Four-star hotel guests pay €1.10. Cruise ship visitors pay €2.25 for over 12 hours and 65 cent for less than 12 hours.

BERLIN

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Brandenberg Gate in Berlin

Visitors to Berlin pay a 5pc charge on the room rate excluding VAT, which is also charged. The charge supports the cultural and tourism sectors in the city. Collection of the tax is limited to a 21-day maximum.

DUBROVNIK

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Dubrovnik's Old Town. Photo: Deposit

The Croatian government hiked its tourist tax by 25pc in the peak season for this year, but the charge still remains relatively low at €1.35 per night. The tourism tax is applied to each person in all accommodation types, excluding campsites.

VIENNA

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Danube Canal) of Vienna, Austria. Photo: Deposit

In Austria, tourists have to pay an overnight accommodation tax, which is charged at a local level. The charge varies across the country. In Vienna, it amounts to a 3.02pc surcharge on the hotel bill.

ATHENS

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Athens

Greece introduced a hotel-stay tax, which came into effect last year, with variable prices depending on the category of accommodation. The charge in Athens ranges from just 50 cent per person per night up to €4 for more luxurious accommodation.

ROME

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The eternal city of Rome

The city tourism tax ranges from €3 per person per night for one and two-star hotels up to €7 for a five-star hotel. The tax is also charged on short-stay holiday apartments at a rate of €3.50

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