New tourism tax would negatively affect competitiveness, says the hospitality industry (3)

Tallinn Old Town (Siim Lõvi /ERR)
2/1/2016 2:19 PM
Category: Economy

The Government is looking for new sources of revenue. To support local infrastructure, recent administration reform proposals suggest the introduction of a visitor’s tax. Minister of Entrepreneurship Liisa Oviir says more research is necessary.

According to ERR’s radio news service, a new tax could be introduced as early as 2018. The tax would likely follow the example of several regions and cities in Europe that raise a fixed tax per visitor and night spent.

The Estonian hospitality industry thinks such a tax would affect Estonia's competitiveness in this sector. Verni Loodmaa, chairman of the Estonian Hotel and Restaurant Association, said that with the neighbouring economies showing a downward trend, and with no sign of greater efforts to make Estonia attractive as a tourist destination, it wouldn’t be wise to introduce a new tax and increase the pressure on the industry even more.

According to the reform proposals, the tax would bring local governments a projected 4.6 million euros per year, which they then could use to improve their infrastructure and advertise themselves to attract more visitors.

Minister of Entrepreneurship Liisa Oviir was careful to point out that more research was needed. “First of all, the Russian and Finnish markets have been declining, which likely won’t change anytime soon. Secondly, VAT on hospitality services will be raised to 14 percent in 2017. In terms of competition, we’re in a single market with our closest neighbours. In Finland VAT on hospitality services is 10 percent, in Latvia 12 percent, and in Germany 7 percent. If we raise it to 14 percent in Estonia and add a visitor’s tax on top of that, this could be hard on the hospitality industry,” Oviir said.

Dario Cavegn

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