Iceland wants to revise tourism tax policy to combat overtourism

Iceland needs vacationers to flock to its effervescent sizzling springs, picturesque ice caps and moon-like lava landscapes, however not on the expense of residents or the pure surroundings.

This small Nordic nation well-known for its ice and fireplace just isn’t alone. From Amsterdam to Venice, hotspots around the globe have launched measures to attempt to curb the unfavorable impacts of overtourism whereas preserving what is commonly an important income.

“We’re nonetheless working laborious to form the tax system for the way forward for tourism,” Icelandic Prime Minister Bjarni Benediktsson advised CNBC by way of video convention.

“We need to transfer extra towards a user-pays system. For my part, we need to transfer extra towards a nationwide charge for magnet utilization, as we name it,” Benediksen mentioned.

“By doing this, we will management the stream. So, at occasions of peak demand, we will cost greater taxes, and we will management that by modifying the charges inside a day, between months, or throughout elements of the yr. However that is nonetheless a piece in progress.

The Icelandic authorities reinstated the so-called vacationer tax at the start of this yr, searching for to boost funds for sustainable improvement plans and cut back the environmental influence of mass tourism.

The levy, which has been suspended throughout the Covid-19 pandemic, imposes a nominal charge of 600 ISK ($4.34) on resort rooms, with completely different charges additionally levied on campsites, cellular properties and cruise ships.

Benediksen described his predecessor’s reintroduction of the vacationer tax as an “essential choice” for the nation. Nevertheless, he mentioned the federal government must additional discover the precise steadiness.

Benediktsson, chief of Iceland’s pro-business right-wing Independence Occasion, succeeded Katrín Jakobsdóttir as prime minister in early April. He served as Prime Minister in 2017.

His second time period as chief comes because the nation grapples with hovering rates of interest, excessive inflation and a sequence of volcanic eruptions.

Late final month, a volcano in southwestern Iceland erupted for the fifth time since December, spewing lava as soon as once more threatening the coastal city of Grindavik.

Seismic exercise additionally pressured the evacuation of one of many nation’s most visited websites, the Blue Lagoon geothermal spa. The lagoon has been reopened to vacationers after authorities mentioned the eruption had stabilized.

Iceland’s tourism trade has recovered from a stoop throughout the coronavirus pandemic. The nation, with a inhabitants of about 383,000, is predicted to obtain 2.3 million vacationers this yr, practically 2.4 million in 2025 and as many as 2.5 million in 2026.

Income generated by tourism is more and more essential to the Icelandic financial system.

In reality, tourism will account for 8.5% of gross home product by 2023, in accordance with Statistics Iceland, citing preliminary knowledge from the Tourism Satellite tv for pc Account. That is up from 7.5% in 2022 and above the pre-COVID-19 common of 8.2% from 2016 to 2019.

Wanting forward, Benediksen mentioned the federal government was creating its tourism tax system via its personal “everlasting balancing test”.

“We proposed a system beneath which we take a look at sure indicators: Is nature in steadiness someplace? Is society pleased with improvement? Is it a inexperienced mild, a yellow mild or a crimson mild?” Benediksson mentioned.

He added: “If we discover locations which can be being broken by the variety of guests, say the geysers the place we’ve got sizzling springs, we have to take motion.”

“These are the issues we try to develop and we try to comply with the metrics and be certain that the event of the trade is effectively acknowledged by society and nature.”