Your Iceland trip will soon cost more, thanks to a new tourism tax

Thanks to social media, Iceland is now one of the most desired places to visit globally. Who doesn't want to go to Iceland and experience the Northern Lights, Blue Lagoon, volcanoes, glaciers, and waterfalls (if our budget allows)? However, it seems that visiting Iceland can now cost you more, due to their new tourism tax. 

What

During an interview with Bloomberg last week, Prime Minister of Iceland Katrín Jakobsdóttir mentioned that implementing a tourism tax could be a potential solution to mitigate the effects of tourists on the nation's climate and environment.

How much will you have to pay?

Although Jakobsdóttir didn't provide a precise figure for Iceland's tourist tax, she informed Bloomberg that it would “not be high, to begin with”. She explained that this initiative would be implemented in the form of city taxes for individuals staying in Iceland.

• She said that the scheme would be introduced as city taxes for people who stay in Iceland. 

Jakobsdóttir also mentioned that her government has been collaborating closely with tourism businesses all across Iceland to implement environmentally sustainable changes. This includes companies transitioning their vehicle fleets to electric options. 

Tourism in Iceland 

• It is no doubt that tourism is one of the most important sectors in Iceland; in fact, the tourism industry generates about 6% of Iceland’s gross domestic product. 
• However, the country has also pledged to be carbon neutral by 2040.
• Over the last decade, this Nordic country has experienced a significant increase in the number of tourists.
• As reported by Euronews, between 2010 and 2018, the number of visitors skyrocketed by over 400 per cent, reaching a staggering 2.3 million. 

READ MORE: 7 Indian passport holders walk in to VFS Delhi for a Schengen visa. Then all hell breaks loose

Not the first country 

A tourism tax serves a dual purpose—it assists cities in managing the challenges posed by tourists while also encouraging visitors to be mindful of overcrowding.

But Iceland isn’t the only destination to introduce a tourist tax.

• Such schemes are already common across Europe, with levies in place in major cities like Paris, Berlin, Amsterdam and Rome.
• Many other countries have also introduced tourist tax, that will be introduced this year like Portugal (in Olhao) or Thailand.
• Venice is also introducing this tourist tax in 2024.
• Bhutan introduced a Sustainability Development Fee in September 2022. While tourists from India have to pay Rs 1,200 per night of stay in Bhutan, that tax is USD 200 (or Rs 16,700) per night for people from other countries. 

Price? These taxes generally range from Rs 200 to Rs 1,000 per night depending on the country. For instance, Thailand is introducing a tourist fee of 300 Baht (Rs 687) this year. 

READ MORE: How will 20% TCS affect your foreign trip from July 1? A breakdown