Iceland to Raise Tourist Tax

As Iceland continues to walk a fine line regarding its relationship with tourism, the country has decided to raise taxes for those staying overnight in the country.

According to an interview with Bloomberg, Iceland Prime Minister Katrin Jakobsdottir said that many tourists to the country visit its “unspoiled nature,” which “creates a pressure” on the environment. Outside of the capital city of Reykjavik, the most popular tourist track is the “Golden Circle,” a 190-mile route to Iceland's three most popular natural attractions: Thingvellir National Park, the Geysir geothermal area and Gullfoss waterfall. Many of these sites already have parking fees, which were reportedly controversial when they went into effect.

The new taxes, which would likely be implemented in 2024, would be a way to ensure that local communities benefit from tourist traffic. A poll by Prósent for Fréttablaðið in 2022 found that nearly three-quarters of Icelanders agreed that international visitors should pay for access to natural sites and parks.

In 2022, according to the Icelandic Tourist Board, 1.7 million people visited Iceland, a 146 percent increase over 2021, although it was still 31 percent below the total number in 2018, a record year for the country. Through August 2023, Iceland has received 1.5 million visitors, which would put it on pace for nearly 2.3 million for the year—just 3.4 percent below 2018 levels. To that end, tourism is one of Iceland’s largest exports, generating about 6 percent of its GDP.

As the country looks to hit its goal of being carbon neutral by 2040, it’s looking to implement taxes on visitors, although they won’t be high to begin with, according to Jakobsdottir. Other initiatives the country has taken since she took office include tapping geothermal heat for heating and electricity and working on carbon capture.

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