Where your tourist tax really goes

Visitor fees are becoming the norm in many destinations – but what is all this cash actually being spent on?

When I visited Bhutan on an assignment 15 years ago, I didn’t encounter many tourists. The country had been open to visitors since 1974, but a prohibitively high fee (at that time, at least $200 per day – including food, guides and accommodation – as well as a $65 government charge) meant that only those with big budgets could enter. 
At times, it felt as though the cost created a barrier to real connection. Those who visited mostly stayed in the luxurious hotels built especially for them and were transported between the country’s attractions in blacked-out 4x4s – an incongruous sight on the empty mountain roads that wound towards sacred monasteries and remote villages marooned on high plains. 
Since then, hiking and homestays have increased in popularity as a more mindful brand of tourism takes hold – but the country won’t be welcoming budget tourists any time soon. Visitors (excluding those from neighbouring India, who pay significantly less) are currently charged a “sustainable development fee” of $100 per day – in addition to tour and accommodation costs – the most expensive tourist levy in the world.  
In a country that’s smaller than some American states and has a population of fewer than 800,000, the fee has a tangible impact, according to Damcho Rinzin, director of the department of tourism in Bhutan.
“Funds are allocated to various projects that enhance facilities, services and infrastructure for nationals and guests who visit Bhutan, as well as funding free healthcare and education,” he says.
Projects part-funded by the fee have included bringing underground electrical cables to Gangtey and the Phobjikha Valley, where endangered black cranes spend their winters. More has been spent on cleaning and maintaining hiking trails, training tourism workers and contributing to a move away from reliance on fossil fuel, according to Rinzin.  
Despite this, Bhutan’s approach hasn’t been without its detractors, who argue that it’s made tourism elitist and hampered its impact on the economy. But, with an increasing number of destinations struggling with overtourism, the benefits of the country’s “high value, low volume” strategy seem increasingly evident. Since I visited Bhutan, lots of places have introduced tourist fees or taxes (albeit at much lower levels). 
You’ll pay them if you’re holidaying in France and regions of Spain, Portugal and Germany, if you climb Mount Fuji in Japan, or if you take a city break in Amsterdam (which has Europe’s highest tourist tax, at 12.5 per cent of the accommodation cost). Many popular destinations are using the money raised in part to protect and repair the local environment.
In the Balearics, where visitor numbers rose 9 per cent year on year in 2023 and seasonal overcrowding has led to a spate of demonstrations in Mallorca, a “sustainable tourism tax” has been in place since 2016, with charges ranging from 50 cents to €4 per day depending on the season and accommodation rating. More than half of the €94.5 million raised in 2023 will go to projects related to water and environmental conservation, according to local news site Majorca Daily Bulletin. This comes amid a backdrop of water scarcity caused, in part, by heavy tourist use. Another initiative hopes to drive visitors to the islands out of season for sports and cultural events. 
Meanwhile, in Venice, a controversial pilot scheme which charged daytrippers a €5 per day entrance fee (overnight visitors already pay a nightly tax) ended on July 14. Some residents criticised the scheme, saying it didn’t deter visitors to the city, but Simone Venturini, Venice’s councillor for tourism and economic development, believes that the money generated will help address their impact. 
“In 29 days, [the fee] generated revenue of approximately €2.2 million,” he says. “In this first year, a large part of that will be used to pay for the ‘machinery’ that’s been created to guarantee controls and develop the experiment, including the digital platform for booking and payment. The remaining funds, as with the tourism tax, will finance city maintenance and services for citizens and tourists. Cleaning the city and public water transport have extra costs compared to other cities.”
Tourist taxes aren’t only used to counteract the effects of overtourism. In 2023, the Japanese city of Nagasaki began to charge between 100 and 500 yen per night in daily taxes. Reportedly it hopes to use some of the money raised to improve exhibits at its Unesco-listed site of Japan’s Meiji Industrial Revolution. 
Greece scrapped its existing hotel tax and introduced a more expensive “climate crisis resilience fee” (ranging from 50 cents to €10 per night) at the beginning of 2024. This was done to fund rebuilding and responses to future extreme weather events in the wake of 2023’s devastating wildfires and flooding. In February, Bali introduced a $10 daily fee for visitors that it says will support “efforts to preserve the nature and culture” of the country as well as develop transport infrastructure. Now, councillors in rather less exotic Nottingham have voted in favour of a £2 daily levy to put towards marketing the city’s attractions. 
The UK remains divided about the idea of tourism taxes. In England there is currently no basis in law, though there are ways to get around this. In 2023, Manchester introduced a £1-per-night “city visitor charge” on hotel and serviced apartment stays using a tourism-based business improvement district. It’s using part of the £2.8 million it raised to drive visitors to the city in low-occupancy periods through events and advertising, according to a recent report. Some of the money will also help clean the city’s streets.
But because post-Covid Britain is still struggling to attract tourists, many operators are against making stays more expensive. A similar scheme to Manchester’s was due to begin in Bournemouth, Poole and Christchurch on July 1, but it’s been postponed until at least autumn 2024 after concerns were raised by hotels.
Meanwhile, as it debates the wisdom of introducing its own tourist tax, one Scandinavian city has taken a radically different approach to deterring bad visitor behaviour: instead of charging tourists, why not put them to work and pay them instead? Under Copenhagen’s new CopenPay pilot scheme, tourists get free lunches, guided museum tours and kayak rentals in return for travelling by bike, litter picking or working in an urban garden.
“It is a core task for us to make travelling sustainable. And we will only succeed if we bridge the large gap between the visitors’ desire to act sustainably and their actual behaviour,” Mikkel Aarø-Hansen, the chief executive at Wonderful Copenhagen, revealed on its website.