How do tourism taxes impact travelers’ choices? – Image: Christian Ohde/chromorange/picture alliance
From Venice to Barcelona, overcrowded travel destinations are taxing vacationers. But the question remains as to whether such strategies really help reduce overtourism — and where the money generated goes.
High tourist taxes did not stop 39-year-old Susanne Meier from visiting the Himalayan country of Bhutan twice. In fact, Bhutan boasts the world’s highest tourist tax, known as the “Sustainable Development Fee.” Tourists are charged $100 (€95) per person per day to visit — a steep price tag for most travelers. The tourism tax comes in addition to additional required travel costs, such as a driver and guide, which are services usually arranged by tour companies for an extra price.
“The people there want slow tourism, not cheap tourism,” says Meier, who works for the travel company Bhutan Travel based in Moosburg, Bavaria. “When tourists see the positive effect that the tax has there, they are happy to pay it,” she says of her customers.
Tax goes toward improving Bhutan
Bhutan’s tourism authority says this revenue goes directly toward helping the country’s approximately 800,000 citizens. Authorities put tourists’ money toward health care, education and infrastructure while strengthening initiatives that support the environment and help local businesses.
The country reported earning $26 million in revenue in 2023 from the fee.
Of course such a high tourism tax acts also as a deterrent: Authorities reported that just 103,000 tourists visited Bhutan in 2023. The majority of those tourists were from India, the only country whose citizens pay a lower daily tax to visit.
Bhutan charges tourists a hefty daily tax – Image: Nick Kaiser/dpa/picture alliance
With 962,000 million inhabitants, the population of the Spanish island of Mallorca is similar to that of Bhutan. However, residents there have been inundated with tourists in recent years and have staged numerous protests.
About 13 million people vacationed on the island in 2024. As a result, it’s hardly surprising that many residents have been lobbying to put limits on mass tourism.
The island installed an accommodation tax in 2016. Depending on the hotel category, vacationers must pay up to €4 ($4.16) per day. According to plans by the government of the Balearic Islands, the tax could be raised to six euros, while also being scrapped during wintertime. The money is used to finance projects aimed at making Mallorca more sustainable. However, this tax has done little to deter tourists from visiting — the island sets new tourism records year after year.
Accommodation taxes do little to deter tourists
“The effect of such taxes on tourist demand is very small,” says Jaume Rossello, professor of applied economics at the Balearic University in Mallorca’s capital, Palma.
In Barcelona, for example, travelers currently pay up to €7.50 per day, depending on the hotel category. In Berlin, meanwhile, a tax of 7.5% of the price of an overnight stay is charged, while in Paris visitors may have to pay almost €16 a night for the most expensive category of hotels. Yet Rossello says it’s still unclear at what price tourists might start to think about changing their destination.
Harald Zeiss, a professor at the Institute for Sustainable Tourism in Wernigerode, Germany, says many destinations use the revenue from tourist taxes to offset environmental impacts, finance sustainability projects and maintain tourism infrastructure. “At least that’s how it’s described when such taxes are planned and introduced,” he says.
How the money is used varies greatly. It can range from the development of sustainable mobility to simply padding a city’s budget. “For this reason, it’s crucial to earmark funds transparently,” points out Zeiss. “However, if the coffers are empty, then the intended use is often broadly defined.”
Residents in Spain have carried out many protests against the negative effects of tourism on their neighborhoods – Image: Matthias Oesterle/ZUMA Press/picture alliance
Loath to criticize tourism
In many destinations, the revenue from tourism taxes makes up a significant portion of a city’s tax-related revenue. In Barcelona, the money earned from tourism taxes is around €100 million ($104 million), according to the municipality, making it the third-largest source of municipal income. Yet, Barcelona has been wracked with anti-tourism protests as locals face soaring rent prices due to short-term holiday rentals from companies like Airbnb.
As a result, Barcelona’s authorities say they are now deliberately focusing on financing projects that benefit the general public and not just the tourism sector. Around €100 million ($104 million), raised from taxes on overnight stays in tourist accommodations is currently going into Barcelona’s School Climate Plan, which installs climate control systems in the city’s schools.
The revenue from the overnight accommodation tax in Berlin, also known as the City Tax, has not yet been earmarked. The money, which was almost €90 million in 2024, currently flows into the city’s general budget.
This is also the case in Amsterdam, where a tourist tax has been in place since 1973. It currently amounts to 12.5% of the price of an overnight stay and is expected to generate revenue of €260 million in 2025, according to a spokesperson for the city council. City officials maintain that the tax is both an important source of revenue and a tool to control tourism growth. However, the deterrent effect of such a tax is likely to be small.
Venice makes changes
After much ado, Venice, Italy, initiated its much-talked-about tourist tax in 2024. Day-trippers had to pay an entrance fee of €5 on 29 peak season days. Opposition politicians criticized the fee for being too low to deter tourists from visiting the overcrowded city. As a result, Venice pushed up the number of fee-charging days to 54. Anyone who does not pay the fee four days in advance of their visit will now have to pay €10.
Whether or not potentially paying a few extra euros will deter anyone from visiting the sinking city remains to be seen.
Researcher Jaume Rosselló, from the University of the Balearic Islands, has his doubts. “For most people, going on vacation is not a luxury, but a basic need.” He points out the example of Mallorca, where most tourists pay the accommodation tax without grumbling about it. “Taxes like these are generally pretty well received,” says Rossello. “Especially if they contribute to improving the sustainability of a destination.”
Yet many tourists still have limits, as the example of Bhutan shows. When the tourist tax was raised to $200 after being $65 for several decades, fewer tourists chose Bhutan for their holidays. Susanne Meier saw a clear difference: “We noticed this in the number of bookings. Nobody wanted to pay that amount.” (DW/NAN 11-03-25)
