POLICIES AND PRACTICES IN TOURISM TAXATION AN OECD REVIEW
An increasingly important issue Many countries face a fiscal consolidation challenge, pushing them to act on both the revenue and the spending side. Strong tourism growth has led to increased pressure on infrastructure and budgets with responsibility for i) marketing and promotion; ii) providing the necessary services and facilities; and iii) ensuring visitor safety and security. Tourism taxation provides governments with one avenue of funding to meet the cost of supporting tourism growth. There is an intense debate about the role of tourism taxation and its impact on the competitiveness and attractiveness of destinations, and a strong demand for more information. But there remains a general lack of detailed comparative information on tourism-related taxes, fees and charges and their potential impacts on the tourism economy. 2
OECD Tourism Committee work on taxation Provide comparative knowledge in the form of an inventory of tourism-related taxes in OECD and partner countries at the national level Explore the rationale and concerns relating to tourism-related taxation from both a government and industry perspectives Highlight recent trends and interesting practices Provide a benchmark to enable the assessment of changes in tourism taxation over time As of today, submissions have been received from 26 OECD and Partner countries The inventory is to be completed by the end of 2013 3
Departure taxes, fees and charges Australia - Passenger Movement Charge Introduced in 2005 as a cost recovery mechanism The current rate is AUD 55 up from AUD 47 in 2012 and AUD 38 in 2008 Non-hypothecated, however, in 2012, the Australian Government announced that AUD 48.5 million of the revenue raised would be allocated to the Asia Marketing Fund (AMF), with a further AUD 48.5 million allocated to the Tourism Industry Regional Development Fund (TIRDF) The aim of the TIRDF is to assist operators to achieve the growth targets set out in Tourism 2020 - Australia s long-term tourism policy strategy Funding available to operators in regional areas, and focuses on projects that will increase the quality and range of visitor experiences and increase interstate and international visitors and expenditure 4
Consumption taxes, reduced rates for tourism 23 of 38 OECD and partner countries have reduced rates for hotels and 14 for restaurants. Primary aim to support overall development, job creation and growth in the tourism industry Reduced rates for hotels ranged from: Israel 0% versus a normal rate of 18%; to Hungary 18% versus 27% Reduced rates for restaurants ranged from: Luxembourg 3% as opposed to a reduced rate for hotels [HR] of 3% and a normal rate [NR] of 15%; to Belgium 12% versus (HR 6% and NR 21%) 5
Environmental taxes, fees and charges Iceland - The Accommodation Tax The Tourist Site Protection Fund was established in 2011 to promote the development, maintenance and protection of nature-based tourist attractions under public ownership or supervision. The Fund is financed by an Accommodation Tax and additional secured government funding. Charged per room, per night (IKR 100), revenue from the Accommodation Tax is dedicated to the Tourist Site Protection Fund. The Fund board makes proposals to the Minister regarding fund allocations, taking into consideration the views of environmental authorities and other stakeholders concerning the relative merits for proposed developments. 6
Tourism-related tax incentives Poland - Income tax exemption for renting guest rooms in rural areas income from the provision of rent and board in guest rooms (for leisure purposes) in rural areas are exempted from the income tax the number of rooms rented cannot exceed five the regulation is aimed at stimulating the development of agri-tourism within rural areas no limits for exemption are specified Provided that all conditions are met, there is no obligation to report to tax offices that rooms have been rented or to register the income obtained on that account 7
Industry perspectives Industry representative bodies expressed a general view that multiple taxes are impediments for tourism businesses and can negatively affect international competitiveness. Specific issues included: Perceptions that air travel levies have a primarily negative impact on destination attractiveness/competitiveness, and particularly for longhaul destinations Negative impacts of consumption taxes (e.g. VAT, GST) on tourism competitiveness when the purchase of goods and services by overseas visitors is not exempt (or reduced), when this is the case in other countries The need for more detailed monitoring, evaluation and analysis of the impacts of existing taxes and incentives. 8
Issues arising The inventory indicates an increase in the number and scope of tourismrelated taxes, fees and charges (and incentives) over the last 10 to 15 years. Apart from general budget, the revenues are often used for: cost recovery of passenger processing at ports of entry, including customs, immigration, security, quarantine and issuing of short-term visas marketing and promotion at the national and subnational level managing environmentally sensitive areas & stimulating environmentally friendly behaviour Interesting practices to emerge include: common visa policy/charges for short-stays Dedicated levies to support environmental protection Incentive schemes to encourage increased investment in tourism infrastructure, increased domestic tourism expenditure, and to promote tourism in rural areas. Beyond the inventory, more analysis is needed on the linkages between tourism taxation and competitiveness 9
OECD Tourism Trends and Policies This publication is undertaken in partnership with the European Commission. The 2014 edition of OECD Tourism Trends and Policies will include a chapter on taxation and tourism For more information about the OECD Tourism Committee: www.oecd.org/cfe/tourism Alain.dupeyras@oecd.org 10