Iceland desires to change up its tourism tax to guard nature — and combat overtourism

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

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

“We try nonetheless to mould the taxation system for the tourism sector for the long run,” Iceland’s Prime Minister Bjarni Benediktsson informed CNBC through videoconference.

“We wish to lean extra in the direction of a system the place the consumer pays. As I see it, we might wish to go extra towards accession charges to the magnets, as we name them, across the nation,” Benediktsson stated.

“By doing that, we may management visitors. So, on the peak of demand, we may have a better tax the place we may management by amending the charges each inside the day or between months, or throughout elements of the yr. However that is nonetheless within the making.”

Iceland’s authorities reinstated its so-called tourism tax at the beginning of the yr, searching for to lift funds for sustainability applications and mitigate the environmental impression of mass tourism.

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

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

As head of Iceland’s pro-business, right-wing Independence Celebration, 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 pressured 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.

Iceland’s tourism sector has come roaring again from a dip in the course of the coronavirus pandemic. The nation — which has a population of round 383,000 — expects to obtain 2.3 million guests this yr, practically 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 economic system.

Certainly, the tourism sector accounted for 8.5% of its gross home product in 2023, in response to 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 in the course of the pre-Covid interval of 2016 via to 2019.

Wanting forward, Benediktsson stated the federal government was working with its personal “sustainability stability test” to develop its tourism taxation system.

“We got here up with a system underneath which we have a look at sure indicators: Is nature in stability in a sure spot? Is society pleased with the event? Is that on a inexperienced, yellow or purple mild?” Benediktsson stated.

“If we see that locations are being broken by the variety of folks that go to as an example at Geysir the place we have now the recent springs, we have to take motion,” he added.

“These are the issues we try to develop, and we try to observe the symptoms and ensure that the business grows in good acceptance with society but additionally with nature.”