Higher Tourist Taxes? Japan’s Travel Hot Spots Mull Increases

With the recent rise in foreign tourists visiting Japan, local governments across the country are increasingly considering the implementation of accommodation taxes. Municipalities that have already adopted such measures are even contemplating raising their rates.

Current implementation and expansion

Local governments can establish the lodging tax, a non-statutory tax, for specific purposes such as promoting tourism. This tax is levied based on the number of nights a person stays.

Currently, nine municipalities, including the Tokyo Metropolitan Government, Osaka Prefecture, Kyoto City, Kanazawa City, and Fukuoka Prefecture, have implemented the system. More than 30 other municipalities, such as Hokkaido, Niseko City in Hokkaido, and Atami City in Shizuoka Prefecture, are also considering introducing it.

In Chiba Prefecture, Governor Toshihito Kumagai advocated the fiscal necessity of introducing a lodging tax. Last October, he initiated a study group to explore this possibility. By July of this year, the group had approved a draft proposal for a “flat lodging tax” of 150 yen (a mere USD $1.02), following the third meeting of experts. Naoto Hayashi, deputy chief of the prefectural government’s Tourism Policy Division, provided further details.

Based on the 28 million overnight stays in the prefecture during the last fiscal year, a tax of 150 yen per person would generate approximately 4.2 billion yen (USD $28.4M) in revenue, covering the majority of the proposed financial needs.

Hayashi noted, “With the expansion of Narita Airport, the number of inbound tourists is certain to increase. Additionally, with the extension of the Ken-O Expressway, the Boso Peninsula is preparing to accommodate more visitors. The funds from this tax will be allocated as financial resources for municipal initiatives.”

Majority support for taxes in Chiba

In preparation for introducing the lodging tax, Chiba Prefecture recently conducted a survey among lodging businesses, municipalities, and travel agencies. The results revealed that a majority—56.3% of respondents—supported collecting the tax from all overnight guests without exception.

When asked about the potential impact of a lodging tax of a few hundred yen, 52.1% of respondents believed it would have no effect on tourism, while 11.3% expressed concerns that it could lead to a decrease in the number of tourists visiting Chiba Prefecture.

In addition to the proposed prefectural tax, Urayasu City and Minami-Boso City are also considering implementing their own lodging taxes. “If municipalities introduce a lodging tax, it would be added to the ¥150 prefectural tax. However, we must coordinate closely with municipalities regarding the timing of the tax,” explained Hayashi.

Fukuoka Prefecture as an example

Fukuoka Prefecture’s experience offers a potential blueprint. Since 2008, Fukuoka has imposed a 200-yen lodging tax, with Kitakyushu City charging 200 yen per person and Fukuoka City charging 200 yen for lodging under 20,000 yen and 500 yen for lodging over 20,000 yen. In these government-designated cities, the tax allocates 50 yen to the prefecture.

As discussions about lodging taxes continue, some municipalities, including the Tokyo Metropolitan Government, are considering increasing their rates. Recently, Hirosaki City of Aomori Prefecture decided to move forward with implementing accommodation taxes of 200 yen across the board. Questions remain as to whether new taxation measures will deter the flow of tourists.

The benefits of an accommodation tax

Local governments abroad widely adopt the lodging tax as an internationally recognized form of tourism promotion revenue. Japanese regions can also implement it as a non-statutory tax.

The tax is seen as an effective financial resource for several reasons:

• It’s familiar to international visitors.
• It targets significant spending on accommodations.
• Additionally, it can be implemented practically and it aligns with tourism promotion goals such as increasing hotel stays.
• It also promises stable revenue in the medium to long term.

These factors make the lodging tax a practical choice for local governments looking to boost tourism funding.

In the first half of 2024 (January-June), Japan welcomed 1,777,200 foreign visitors, according to the Japan National Tourist Organization. Notably, the number of visitors in June alone reached 3,135,600, marking a significant increase of 51.2% compared to the same month last year.

Implementing accommodation taxes can help mitigate the negative effects of over-tourism that many cities across Japan face. Raising prices for tourists to combat over-tourism has become more common recently, as seen in the increased entrance fees for foreign tourists at Himeji Castle.

Beyond the accommodation tax

In May, the Governor of Osaka announced plans to explore the possibility of introducing a “levy” on foreign tourists staying in Osaka Prefecture to help protect local tourism resources. This levy would be in addition to the existing accommodation tax imposed on hotel stays in the region. The Expert Committee held its first meeting in April, where it outlined specific steps for implementing the levy.

Currently, the prefectural government collects a lodging tax of 100 to 300 yen per night, depending on the room rate, from all guests—both Japanese and non-Japanese—whose room costs 7,000 yen or more per night. Governor Yoshimura emphasized the need to address the rapid increase in inbound tourism (foreign visitors to Japan) and the issue of overtourism (tourism-related environmental and social impacts) in the post-COVID era. He stressed the importance of creating an environment where residents and tourists can coexist.

Referring to Bali, Yoshimura cited Indonesia’s “foreign tourist levy,” which aims to protect tourism resources. “Although there are challenges, we should seriously consider introducing a similar system.”

First of its kind in Japan

If introduced, this would be the first of its kind in Japan, with implementation expected by April 2025. Osaka plans to host the 2025 International Expo next year. Initially, Yoshimura planned to introduce the system before the Osaka-Kansai Expo. However, the director general of the Bureau International des Expositions, which oversees the Expo, raised concerns that such a levy might make overseas visitors feel unwelcome. As a result, Yoshimura decided to delay implementation until after the Expo.

Speaking to reporters, Yoshimura remarked, “The number of foreign tourists to Osaka will surely increase. Coexistence with local residents, including the city’s beautification, will be an important issue.”

The levy tax would add an additional 100 to 300 yen per night to the existing tax. If set at 100 yen, the levy is expected to generate around 980 million yen in revenue (USD $6.6M) for Osaka Prefecture.

Sources

インバウンド急増で… 「宿泊税」導入検討が全国自治体で相次ぐ @niftynews

弘前市の宿泊導入検討　税額は一律200円の方針まとまる　NHK

特集１　宿泊税導入のプロセス　公益財団法人日本交通公社

大阪府、訪日客から「微収金」検討へ　観光公害対策　Nikkei Shimbun

大阪府が外国人観光客を対象にした全国初の「徴収金」構想を検討… 現実には多くの課題も　Nikkei Shimbun