From Iceland — Tourist Site Fees Would Double Revenue Of Increased VAT On Accommodation

Tourist Site Fees Would Double Revenue Of Increased VAT On Accommodation

Published June 19, 2013

Implementing a fee system for access to six popular tourist destinations in Iceland could result in double the revenue that would have been generated from increasing the VAT on overnight stays, according to a report prepared by Arion Bank.
While overturning the prior government’s proposed increase of VAT on accommodation from 7% to 14% was one of the first orders of business for the new government, they have now turned their attention to establishing a fee system so that visiting Iceland’s many natural hot-spots would generate revenue.
As RÚV reports, Arion Bank has forecasted that the assumed constant increase in tourism – estimated at a minimum of 36% increase over the next 2 years – would generate ample revenue to maintain high-traffic areas if fees were introduced.
The calculations of Arion Bank are based on a fee of 3000 to 5000 ISK being charged per person for access to several of Iceland’s natural attractions. The fee hypothesized by Arion Bank would apply to Icelanders and tourists alike.
Arion estimates that implementing the proposed fees would reduce traffic to popular tourist sites and would generate 3- to 5-billion ISK annually, compared to the 500 million ISK that would have been collected through increased VAT on accommodation.
Meanwhile, the Iceland Touring Association (FI) would like to see fees collected from tourists upon arrival and departure to and from the country as well as put a special fee on high-traffic natural attractions, RÚV reports.
“All who come and go from the country, whether by air or boat, would pay a certain fee. This way of collecting fees would not trouble the tourism industry,” said Ólafur Örn Haraldsson, FI president. “This fund would then be used for general development of tourist areas that have not been charging individually.”
In FI’s vision, sites like Þingvellir, Gullfoss, Geysir, Landmannalaugar, and Dimmuborgir would begin charging individual fees immediately, rather than waiting for a fund to be established through the fees charged on arrival and departure.
RÚV does not mention whether FI’s proposed charge on arriving and departing tourists would apply to foreign passport holders with legal residency in Iceland.

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