Iceland Considers New Tax On Tourists, Being A Victim of Its Own Success

It could soon be more expensive to visit one of the world’s hottest and most expensive holiday destinations.

Iceland’s government is considering ways of raising taxes in the tourism sector being overwhelmed by a record number of visitors in spite of its far-flung location. Limiting sightseers’ access to the country’s most popular spots wld be the alternative.

“The sector and all of us have to be careful not to become victims of our own success,” Thordis Kolbrun Reykfjord Gylfadottir, Iceland’s tourism minister, said in a recent interview in Reykjavik.

with visitors’ numbers growing exponentially — from 490,000 in 2010 to an estimated 2.3 million this year, a tourism boom was created by a currency plunge and its location for scenes featuring in the popular TV series Game of Thrones. And considering Iceland’s population totals less than 340,000, that’s a lot of visitors.

According to Islandsbanki, the country’s second-largest lender, bringing in a forecast 45 percent of foreign exchange — or 560 billion kronur ($5.1 billion) — in 2017, tourism is now the country’s main export.

The natural treasures such as the famous Blue Lagoon or Jokulsarlon, an otherworldly glacier lagoon on that island’s southeastern coast that is currently at the center of a legal dispute legal dispute, could be spoiled and the experience for visitors would be ruined by overcrowding, worries Gylfadottir.

The minister is calling on her partners in government and the tourism industry to be “brave.”

“Some areas are simply unable to facilitate 1 million visitors every year,” she said. “If we allow more people into areas like that, we’re losing what makes them special -– unique pearls of nature that are a part of our image and of what we’re selling.”

A number of options is being considered by the coalition government. Hiking the existing levy on hotel rooms or forcing bus companies and tour operators into buying a special license are included in the plans. The hotel tax could bring in as much as 1.2 billion kronur this year and generated 400 million kronur in revenue in 2016, ministry officials say.

Plan to impose the purchase of a “nature pass” priced at $14 on all visitors — Icelanders and foreigners, was attempted by Iceland’s previous government but it failed to pass a bill.

Tourists already have to foot considerable bills visiting the country and any tax hike would add to the bills for them.

According to Islandsbanki, the price of alcoholic beverages is more than double the EU average, hotel rooms are as much as a third more expensive than comparable accommodation in other Nordic capitals and a taxi ride from the airport to the city center costs around $150.

Improvement of infrastructure and facilities would be done by proceeds of any new levy, the ministry says.

“When we talk about charging for access, to me that relates more to controlling the number of people entering particular areas – which we need to do,” Gylfadottir said. “We also need to ensure that tourists that come here get a positive experience during their stay.”

(Adapted from Bloomberg)

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