Iceland desires to revamp its vacationer tax coverage to…

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The Blue Lagoon geothermal spa close to the fishing city of Grindavik, Iceland, on Might 23, 2024.

John Moore | Getty Photographs Information | Getty Photographs

Iceland desires tourists to flock to its effervescent sizzling springs, picturesque ice caps and lunar-like lava landscapes — however not on the expense of its residents or pure surroundings.

The tiny Nordic nation recognized for hearth and ice just isn’t alone. From Amsterdam to Venice, sizzling spots throughout the globe have brought in measures to attempt to crack down on the negative impacts of overtourism, whereas retaining what is usually a massively important supply of revenue.

“We are trying still to mold the taxation system for the tourism sector for the future,” Iceland’s Prime Minister Bjarni Benediktsson advised CNBC through videoconference.

“We would like to lean more towards a system where the user pays. As I see it, we would want to go more toward accession fees to the magnets, as we call them, around the country,” Benediktsson stated.

“By doing that, we could control traffic. So, at the height of demand, we could have a higher tax where we could control by amending the fees both within the day or between months, or during parts of the year. But this is still in the making.”

Iceland’s authorities reinstated its so-called tourism tax at the beginning of the 12 months, searching for to boost funds for sustainability packages and mitigate the environmental affect of mass tourism.

The levy, which was suspended through the Covid-19 pandemic, applies a nominal charge of 600 Icelandic krona ($4.34) to hotel rooms, with various prices additionally utilized to campsites, cellular properties and cruise ships.

Molten lava is overflowing on the street resulting in the well-known vacationer vacation spot Blue Lagoon close to Grindavik, western Iceland, on Feb. 8, 2023.

Kristinn Magnusson | Afp | Getty Photographs

Benediktsson described his predecessor’s reintroduction of the tourism tax as an “important decision” for the nation. Nonetheless, he says the federal government must go additional to seek out the appropriate stability.

As head of Iceland’s pro-business, right-wing Independence Get together, Benediktsson replaced Katrin Jakobsdóttir as prime minister in early April. He beforehand served as prime minister in 2017.

His second stint because the nation’s chief comes at a time when the nation grapples with hovering rates of interest, excessive inflation and a sequence of volcanic eruptions.

Late final month, a volcano in southwestern Iceland erupted for the fifth time since December, spewing lava that after once more threatened the coastal city of Grindavik.

The seismic exercise additionally compelled the evacuation of one of many nation’s most visited websites, the Blue Lagoon geothermal spa. The lagoon has since reopened to tourists after authorities stated the eruption had stabilized.

Booming tourism revenues

Iceland’s tourism sector has come roaring again from a dip through the coronavirus pandemic. The nation — which has a population of round 383,000 — expects to obtain 2.3 million guests this 12 months, almost 2.4 million in 2025 and as many as 2.5 million in 2026.

The income generated by tourism has been more and more essential to Iceland’s financial system.

Certainly, the tourism sector accounted for 8.5% of its gross home product in 2023, in accordance with Statistics Iceland, citing preliminary figures of the Tourism Satellite tv for pc Accounts. That is up from 7.5% in 2022 and exceeds the 8.2% common recorded through the pre-Covid interval of 2016 by means of to 2019.

The Skolavordustigur pedestrianized avenue in Reykjavik, Iceland, on Nov. 11, 2023.

Bloomberg | Bloomberg | Getty Photographs

Trying forward, Benediktsson stated the federal government was working with its personal “sustainability balance check” to develop its tourism taxation system.

“We came up with a system under which we look at certain indicators: Is nature in balance in a certain spot? Is society happy with the development? Is that on a green, yellow or red light?” Benediktsson stated.

“If we see that places are being damaged by the number of people that visit let’s say at Geysir where we have the hot springs, we need to take action,” he added.

“Those are the things we are trying to develop, and we are trying to follow the indicators and make sure that the industry grows in good acceptance with society but also with nature.”

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