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What is the tourist tax?

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Some tourist cities have a love-hate relationship with tourists: The town needs them and the money they pump into the local economy, but sometimes they get too crowded.

Some tourist destinations have adopted the practice of levying a fee on tourists (sometimes called a tourist tax) to generate revenue from visitors and offset overtourism.

What is the tourist tax and how does it work?

A tourist tax is a fee paid by visitors to a city. It can be a fee just for entering a city or country, or a fee charged by hotels and other accommodation providers to their guests.

For example, Orange County, Florida, home to most of the Walt Disney World Resort and Universal Orlando Resort parks, imposes a 6% Tourism Development Tax (TDT) on hotel and short-term rental stays of less than six months. In March 2024, this tax revenue is expected to exceed $40 million, a monthly record high.

Florida law allows county governments to levy such taxes. In some areas, the occupancy tax is called a city tax, and is often added to your bill when you check out.

Another way to impose a tourism fee is to charge it upon entry into a city or jurisdiction. For example, Venice, Italy, has begun charging a fee of $5.35 (€5) per person who enters the city for just one day and does not stay overnight. This is an experimental program that will be implemented on select dates between April 25 and July 14, 2024.

The city raised $1.05 million (€977,430) in the first 11 days of the levy, less than the cost of building the system.

Other cities are taking inspiration from Venice’s day-tripper tax experiment to see whether it could be an option for them.

Australia charges a Passenger Mobility Charge (PMC) of US$40 (AUD$60) for anyone leaving Australia to another country. This is included in every ticket sold by transport companies and is paid to the government. New Zealand, on the other hand, charges a fee when you enter the country, not when you leave. New Zealand has an International Visitor Tax, which visitors must pay on arrival of US$21 (NZ$35).

Other countries impose similar entry and exit taxes.

One of the countries with the highest tourism taxes was Bhutan, where tourists had to pay a $200 per person per night tax, called the Sustainable Development Charge, which is set to drop to $100 per person per night in 2023.

Tourism taxes can vary: cities and countries can adjust the tax rate according to the season or impose it at peak times such as festivals or holidays. Shoulder SeasonTaxes set forth in city, county, or other types of ordinances can change annually or during a government session.

Why is there a tourist tax?

When tourists visit somewhere, they visit areas where people live and work. More visitors can put strain on infrastructure, damage the environment, increase traffic, and even raise the cost of living.

The term overtourism refers to the phenomenon where the number of visitors has a negative impact on the quality of life, especially for local residents.

In some areas frequented by tourists, overtourism can drive up rents and other prices, sparking backlash from local residents.

Before the pandemic, anti-tourism campaigns were a big focus in cities such as Barcelona, ​​Spain, a popular tourist destination that sees thousands of visitors each day on hotel stays and cruise ships.

The city recently increased the tax that tourists pay when they stay in hotels.

Who has to pay the tourist tax?

Generally, tourists visiting a city or region must pay a tourist tax, although there may be exemptions depending on the jurisdiction and type of tax.

Children may travel free or at a reduced price, as may people with disabilities.

For example, the Venice Day Trip Tourist Tax is exempt for people who live or were born in Venice, minors under 14, holders of a European Disability Card and one accompanying person, and members of the armed forces, police and other public security services.

Tourist taxes are widespread

Chances are, you’re already paying taxes as a tourist. Many accommodations charge an occupancy or lodging tax as part of the room rate for your hotel or vacation rental.

Other fees are part of the airfare. Travelers pay the fees when they book their flight, and the airline then pays them to the appropriate government agency. These are sometimes called departure fees, arrival fees, etc.

Whatever amount tourists pay, that money is supposed to go back into the local community.

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