Iceland to change tourism tax. Why this decision?

2024-06-18 11:58:46Lifestyle SHKRUAR NGA REDAKSIA VOX

Iceland wants tourists to flock to its hot springs, picturesque ice caps and moon-like lava landscapes – but not at the expense of its people or the natural environment.

The small Nordic country known for fire and ice is not alone. From Amsterdam to Venice, hotspots across the globe have introduced measures to try to suppress the negative impacts of overcrowding while maintaining what is often an extremely important source of income.

The Prime Minister of the country, Bjarni Benediktsson, said that efforts are being made to shape the tax system for the tourism sector for the future. The idea is that of a system where the user pays. By doing this the traffic of people can be controlled. So, at peak demand, there may be a higher charge which can be controlled by changing rates both intraday and between months, or during other times of the year. But this is still in preparation.

Iceland's government reinstated the so-called tourist tax earlier this year, seeking to raise funds for sustainability programs and mitigate the environmental impact of mass tourism.

The tax, which was suspended during the Covid-19 pandemic, applies a nominal fee of $4.34 to hotel rooms, with different costs for campsites, mobile homes and cruise ships.

Benediktsson described the restoration of the tourism tax by his predecessor as an important decision for the country. However, he added that the government needs to go further to find the right balance.

Iceland's tourism sector has bounced back from a slump during the coronavirus pandemic. The country, which has a population of about 383,000, expects 2.3 million visitors this year, nearly 2.4 million in 2025 and up to 2.5 million in 2026.

Income generated from tourism has been increasingly important to Iceland's economy. The tourism sector accounted for 8.5% of gross domestic product in 2023, up from 7.5% in 2022.