Italy and The City Tax
It is now official, Florence and Venice have followed suit and have decided that they will also be taxing the tourist and it all became official on the 1st July 2011. Rome started it all at the beginning of the year and 7 months later Florence follows in their footsteps, together with Venice.
There are always 2 sides to every story and sometimes even 3, but the side I am taking and promoting is that I believe it is wrong! Both Rome, Florence and Venice have been attracting thousands of visitors to Italy throughout the many years and people have visited Italy for centuries with the first actual tourists to Italy being the aristocrats during the Grand Tour which began in the late 17th century and later flourished in the 18th century. Italy is not a new destination, it is a destination which has grown through the ages.
After the Grand tour which was mainly for academics, priests and “important characters”, Italy became a destination for wealthy families and with time the way was slowly paved for mass tourism. Like everything Italy went through its changes but seemed to maintain and still does a tourism which is relatively contained and which I would also say is somewhat “elitist”?
Rome, Florence and Venice are cultural epicentres and are able to provide everything you are after when visiting a city. These cities have grown and developed and this is because of its many visitors who have contributed to the growth of the city, airports, railway systems, roads, buildings, general infrastructures have improved, the popularity of these cities have given rise to businesses, new hotels, B&Bs, apartments, galleries, museums, excursions, taxi companies, restaurants, wine bars, trattorias, cafes, bars, gelaterias, shops, I could keep going on forn ages. The visitor provided these cities with their main economy and sometimes only economy……… Tourism! Tourism generates money and gives rise to competition, ideas, businesses, investment and it affects everyone, from Silvio selling ice-cream to Sandro in the San Lorenzo market selling leather handbags, it affects Luigi who stands guard in his Centurion’s uniform outside the Colosseum to Daniele who spends the evening buffing up his Mercedes S class for the morning transfer to Fiumicino.
Here are a few facts which may help you to perhaps change your mind or join in the dialogue.
- Did you know that Italy’s national debt stands at around 120% of GDP in comparison to about 61% for the UK. These figures seem to change subject to which expert you talk to however Italy owes about $1.89 trillion while France is $1.40 trillion. Italy needs to do something.
- One of the main reasons and causes regarding Italy’s non recovery according to various “experts” is due to sluggish productivity growth between 2000 and 2010, ahead of only Zimbabwe, Eritrea and Haiti. Will the city tax generate growth?
- The reason why this "city" tax is possible is only because a new law was passed in Italy allowing all the municipalities to introduce a local tourist tax. This was issued by the Decree of Law 78 in accordance with Article 14 paragraph 16 and as converted by law No. 122 dated 2010 and if you read on there is a valid reason why this law had to be passed.
- In the coming months, it is very likely that the Municipality of Venice will choose to implement this tax. Payment in all the cities will be made by each client directly at the hotel or property where they are staying. However at the moment there seems to be quite a lot of opposition to the tax with scenes of protest, walkouts by certain councillors, protests from Venetians accusing the council that money is being wasted and suggested that not just tourists but also locals will feel more tax burden under the various proposals on the table. However Venice since I started writing this has now joined and a city tax is now also applicable here.
- It has been stated that the fee (City tax) is intended to financially assist the "city’s" efforts in organizing urban services and is aimed at ensuring that the standard of the tourists’ stay is both highly efficient and of the best quality. My question being what if it is not? What recourse does the Tourist have? Can the Tourist refuse to pay?
- Did you know that the Rome city tax was introduced by Prime Minister Silvio Berlusconi’s government who proposed the levy in order to reduce the 500 million euros ($600 million) the government contributes annually to help Rome control 9.6 billion euros of debt. Italy plans to trim 200 million euros, almost half its annual contribution to Rome’s debt-reduction program, as the government tries to avoid Greece’s fate and ensure investors it can control the budget deficit and Europe’s biggest debt. The Italian budget package which includes the Rome tax was prompted by contagion from Greece’s near default, pushing the risk premium on Italy’s 10-year bonds to a euro-era high and causing a surge in borrowing costs.
- Rome entertains over 9 million visitors each year and with a min city tax of 2 euros per person per night this is a great money generating exercise which will assist in controlling and help in adjusting Rome’s debt and as Maurizio Leo, Rome’s top budget official boldly puts it…. “I don’t understand why everyone is so scandalized by something that is just going to help the city clean up its accounts, which are strongly penalized by the huge amount of visitors who weigh on our services. The surcharge may help the city avoid raising taxes on its 4 million residents as the city tries to compensate for the drop in central government funding”. Is he right? Should the Tourist pay instead of the resident? However consumer and hotel groups say the tax could hurt Rome’s economy, especially its 1,000 hotels. Every euro of tax will weigh on the spending power of tourists and “negatively affect the income of local businesses,” Rome-based consumer association Adiconsum said in a May 28 2011 statement.
- Is Italy the only one to introduce the city tax? Alemanno at a May 28 press conference said other cities also have similar levies. New York applies a 14.75 percent tax on hotel bills, while Amsterdam charges 5 percent and Barcelona 7 percent, according to a statement on Rome’s municipal website. In France, visitors pay a hotel tax of 15 cents to 1.07 euros per person per day. Is it not better to tell the client face to face rather than include it in hidden costs?
- Will the tax affect tourism? “Rome needs to compete with other cities worldwide, so to keep its position as a top tourist destination, any hotel tax should be accompanied with additional services and investments,” says Chema Basterrechea, chief executive officer of NH Hotels SA in Italy and vice president of AICA, the Italian Association of Hotel Chains. “Unless people believe they will get something back, they may decide to go elsewhere”.
- Did you know that foreign visitors spent less time and money inItaly last year, according to Federalberghi. The average length of visits fell almost 3 percent last year to 4.95 days and the average hotel expenditure dropped 7 percent to 690 euros per trip. Tourists visiting Rome declined 3.5 percent in 2009 to 8.86 million, according to data compiled by the Bank of Italy. “Even if it only deters 1 percent of visitors, the hotels and other businesses lose income and the balance of payments is worse off,” said Ian Gamse, a director at London-based Otus & Co.which advises Marriott International Inc. and Hilton Worldwide, in an interview.
- Is this tax “irrelevant” for the wealthy? Taxes would be assessed based on the number of stars assigned to the hotel. Of the city’s almost 50,000 rooms, more than half are four or five stars, meaning those visitors would pay as much as 10 euros a night. The expense would be “irrelevant for luxury travellers, while it may have a different impact on three-star hotels and low-budget tourists,” said Luca Magni, Baglioni Hotels Group’s head of branding and communications. Regina Hotel Baglioni, the company’s only hotel inRome, is a five-star hotel on the city’s most famous street, Via Veneto. The hotel tax isn’t the first time thatRome has hit tourists for additional revenue. The city began charging tourists 50 euro cents last year to put their hands inside the Mouth of Truth, an ancient sculpture carved in marble and immortalized in the Audrey Hepburn movie “Roman Holiday.” It ranks among the city’s top 10 tourist draws, along with the Colosseum, St. Peter’s Basilica and the Trevi Fountain. “Rome is expensive and 10 more dollars is going to deter more tourists from coming here,” says Antonio Williams, an engineer from theU.S. who was visiting the city last week. “I’m definitely against it.”
What is the conclusion to this saga…. Is this the way forward for countries, cities and governments to raise money? Is this something Europe and the UK should look at implementing? Is this just another way of closing the doors to mass tourism and creating an “elitist” form of tourism by making it more expensive to the individual as Italy still remains an expensive destination to visit. At the moment there is discussion that Venice is facing irreversible catastrophe due to mass tourism as it struggles to cope with more than 60,000 tourists a day and this is inciting campaigners to say that Venice should be discouraging mass tourism and instead investing in high end visitors so it is being thought of and this does not only apply to these cities but to other places in Italy also. Personally I think it is time that we start to question decisions made on behalf of the cities, to ensure that monies are not wasted or squandered as is sometimes the case, if the tourist has to pay then it is important that the city delivers and from customer comments and feedbacks and my own experience as a tour operator for more than 15 years, there is still so much room for improvement. I think it is time for dialogue and accountability. However if this works and the money is used wisely and well, perhaps it will be something which will be adopted in other cities worldwide?
What do you think?