The City of Rome originally introduced the tax (the ‘tassa di soggiorno’) four years ago. Today, 1st September, it has doubled it. Rome gave five weeks’ notice to a global visitor economy whose planning cycles are measured in years. Hotels have been sold at one price and now have to charge another. This is an imposition on a completed transaction.
The tourism industry is re-evaluating its commitment to marketing product that includes Rome. Said Jennifer Tombaugh, President of Tauck: “We have already begun selling our 2015 journeys with pricing calculated on rates that did not include the proposed tax increase. Our business model does not permit us to go back to our clients with increased pricing or surcharges. Should the increase occur in September it will have an immediate and harmful effect on our bottom line. We must now reconsider any planned marketing activities intended to promote Italy and Rome, and instead consider investing those funds in promoting other destinations that will provide a better return on our investment.”
There has been no explanation for this sudden increase. Fiscal austerity demands rigour and transparency: if increased tax is a seen as a rational response to the present financial situation, the city should explain its decision. Visitors have become involuntary taxpayers without benefit or voice.
The tourism private sector is central to any city’s marketing strategy yet is often disregarded in public sector decision making. This makes little strategic sense. Most of these taxes are administered at a sub-national level and may escape sufficient scrutiny. The OECD concludes that “there has been a lack of monitoring, evaluation and analysis of the impacts of tourism-related taxes and incentives to ensure they are meeting their stated objectives without adversely affecting tourism competitiveness.”
Tax on tourism affects jobs as well as the cost of holidays. Too many peoples’ livelihoods depend on the industry for such matters not to be subject to more scrutiny and, above all, a proper period of consultation followed by adequate notice of change. In Berlin, individuals and businesses are exempt from paying the bed tax if they entered a contract with hotels before the introduction of the city tax was announced.
France, in order to preserve its position as the world’s most popular destination, abandoned a parliamentary proposal in June to impose a tax increase on hotel stays. It did so at the insistence of Laurent Fabius, Minister for Foreign Affairs and International Development. Fabius described the proposal as "dangerous and totally contrary to the promotion of tourism, which is a priority for jobs and stability.” Recognising its importance, France has launched a 30-point plan to invest in tourism’s future.
Said ETOA’s CEO, Tom Jenkins: “While tax is certain, tourism is not. Tourism relies on planning, on predictable charges being assembled and presented to the visitor. The finances of Rome must be in a desperate condition for them to resort to such a move. Five weeks’ notice is an abject admission of failure in financial planning. Recently, Ignazio Marino, Rome’s mayor, rightly insisted that tourists were largely safe and welcome in his city. Their pockets are clearly not safe from his administration.”