Group NAO Tourism Taxes by Design
A comprehensive 82-page ‘white paper’ with a helpful 10-page introductory summary. The study discusses the extent to which tourism taxes are effective at influencing the flow or behaviour of visitors, whether they have a role to play in helping tourism recover from the pandemic and their potential to help destinations seeking to regenerate their offer or become more resilient.
The landscape in which tourism taxes have arisen is debated, looking at the varying motivations for their introduction.
It is noted that tourism taxes come in all manner of shapes and sizes, often with a degree of regulatory design to target particular sectors or market segments. Ahead of the pandemic “regenerative taxes” were becoming more popular, designed to enhance cultural heritage, develop infrastructure or limit noise pollution.
It is noted that many destinations with tourism taxes have continued to see their visitor arrivals grow, and it has been difficult to isolate the exact impact of taxes on demand. Of interest is the observation that destinations whose offer is not well differentiated from its competitors will see a more significant demand impact from tourism taxes than those with a more distinct offering.
The research finds that local residents are typically in favour of tourism taxes, and while evidence is mixed visitors tend to be far more willing to pay taxes that have a clear and transparent purpose, for example regeneration. However, there are relatively few destinations indulge in such transparency in terms of reinvesting tax revenue.
A survey of DMOs conducted found that the majority faced significant funding challenges with many planning to downsize.
A handy “7 Rs” approach to describing the purpose of tourism taxes is used extensively within the report; revenue (for public good), regulate (flows and behaviour), relief (suspend and compensate), reload (destination marketing), rethink (tourism innovation), regeneration (culture, nature, climate, community) and resilience (insurance and pooling).
A number of broad recommendations are made including that tourism tax revenue is reinvested using transparent and ringfenced criteria, that local and democratic governance and distribution of tourism tax revenue is vital to gain wide stakeholder support and that high visibility and transparency is key to gaining consumer willingness to pay tourism taxes. Furthermore it is noted that extensive public consultation is beneficial and it is vitally important to monitor and evaluate the impacts of tourism taxes.
The report includes very helpful background detail on the types and levels of tourism taxation found in different destinations across Europe.