Tourism Taxes Are Spreading Worldwide—But Will They Actually Stop Overcrowding?

The Balearic Islands, most notably Mallorca and Ibiza, have always had a tumultuous relationship with the multitudes of international visitors flocking in during peak summer months.

Tourists Are Set to Spend a Record $869 Billion in Europe This Year

However, with climate change encouraging off-season travel and a record-breaking 14.4 million international tourists visiting and spending nearly $8.5 billion last year, tourism has become both a primary source of revenue and a threat to a harmonious natural and social environment.

In 2016, to help counteract the seasonal disruption, the archipelago introduced the Sustainable Tourism Tax initiative. The levy—designated for projects ranging from preserving the agricultural landscape to restoring and protecting marine life—charges adult travelers a high-season lodging fee between about $1 and $4 (€1 and €4) per person per day, depending on accommodation type. After nine consecutive days at the same property, the cost is reduced by 50 percent.

“At the time, the eco-tax didn’t cause much debate from tourists or residents,” says Pedro Oliver, a private tour guide in Mallorca and former local council member. “The fee was reasonable and visitors could enjoy their vacation without considering the impact on the destination.”

And while a reported 156 projects were funded by 2019, this collective sentiment has changed over the years.

“Although a significant amount of collected revenue was allocated to the environment in its first year, other projects like heritage, public housing, and tourism promotion campaigns have been steadily increasing,” says Serena Cook, cofounder of IbizaPreservation , a non-profit foundation that promotes the conservation of natural habitats in Ibiza and Formentera.

In March, Balearic Islands President Marga Prohens announced that about $375 million in tax revenue would fund ongoing eco-projects and other initiatives, vowing the government would be transparent about how these funds are spent.

Cook’s foundation believes all funds should go to sustainability-related projects: “The tax would be more effective in promoting sustainability if the focus were strictly on environmental issues instead of funding infrastructure work that different budgets should cover,” she says.

To complicate the debate, GOB, a local environmentalist group, predicts that unless urgent steps are taken to curb tourist numbers, residents will continue to protest over the more pressing issue of mass tourism.

In the Balearics, issues stemming from over-tourism include resident housing shortage, infrastructure damage, overcrowding, and environmental pollution.

All over the world, an increasing number of popular and emerging tourist destinations currently impose or are considering implementing a tourism tax in an effort to combat climate change, enhance local infrastructure, and cater to the growing number of visitors.

To date, additional accommodation charges are the most common type of tourism tax, with many high-traffic destinations opting to increase their fees. Amsterdam raised fees from 7 percent to 12.5 percent of the overnight rate —currently the highest tourism tax in Europe. In Iceland, a destination lauded for its natural beauty, an overnight room tax of ISK 600 ($4.36) was reinstated in January to help protect the country’s resources with sustainability initiatives.

Greece has focused its fee on future natural disasters. The “ climate crisis resilience fee ” charges five-star hotel visitors $4 to $11 (€4 to €10) per person and night. Paris upped their taxe de sejour by 200 percent, resulting in fees of $16 (€14.95) per person per day , for ultra-luxe “palace” accommodations.

Even cities that have yet to feel the pressures of over-tourism are getting in on the action. In 2023, Manchester—the only U.K. city with a tourism fee and goal of increasing tourism—introduced the City Visitor Charge of $1.29 (£1) per room per day. The fee, aimed at attracting travelers with exclusive events, activities, and visitor experience initiatives, raised about $3.5 million in its first year.

The IRS Has Collected $1 Billion From Wealthy Tax Evaders

Kumar Mishra, chair of the Manchester Accommodation BID, the organization responsible for the initiative, envisions a bright future for others wishing to follow suit.

“I see many U.K. cities adopting this model as the fairest and sensible use of resources,” he says. “Cities have to be mindful not to become greedy and ensure the end consumer sees direct value in the charge.”

Barcelona—which recently had an anti-tourist protest —has added a surcharge of $3.50 (€3.25) on top of an existing regional tourism tax that currently charges $3.80 (€3.50) per day for up to seven days in a luxury stay.

“Here, the tourist tax is fixed throughout the year according to the star rating, unlike the Balearics, which is seasonal,” says Enrique Miró-Sans Gabarró, co-owner of Mallorca’s five-star Portella and the family-owned Casa Bonay in Barcelona. “What both destinations have in common is support for a sustainable tourism model, protecting the local infrastructure and promoting quality tourism.”

Many destinations have adopted a quality tourism model, loosely defined as “high-value tourism experiences,” to attract a more discerning visitor. Bhutan’s hefty Sustainable Development Fee of $100 per adult per day is the most expensive tourism tax in the world—and a prime example of this type of government strategy.

The country defends its stance to critics claiming the levy and other mandatory tourist charges are elitist by listing the revenue’s many uses, from environmental and cultural preservation to free health care and education for its denizens. Despite detractors, Bhutan harbors another notable distinction as the world’s only carbon-neutral country.

“I have witnessed Bhutan’s slow and thoughtful tourism development, [creating] a better experience for tourists and residents by avoiding overcrowding,” says Torunn Tronsvang, a former Amankora Punakha Lodge manager and founder of eco-travel company Up Norway .

After years of debate, Norway also plans to introduce a tourism tax this year . While the fee is still unknown, Tronsvang believes it’s the right move for the country and its visitors.

“The justification for introducing a tourism tax is to control overtourism in busy areas and to create better facilities for visitors,” she says. “[For example], the taxes will try and counter multiple daily cruise calls to small towns overrun with thousands of people occupying local facilities.”

Worldwide, cruise ship day-tripper fees vary depending on the port and duration of stay. In April, Venice was the first metropolis to impose a just-over $5 day-tripper tourism tax for peak season visitors—regardless of transport type or stay length —to help reduce tourist numbers. (Bali introduced a similar levy in February .) In the first 11 days of the tax, close to $1 million was raised, yet visitor numbers remained high.

The Balearic Island Statistics Institute recently reported a 17 percent rise in visitor numbers in the first quarter of the year, indicating a potential new record in tourist numbers by year’s end.

Meanwhile, ongoing protests in Mallorca, Ibiza, and Menorca strongly suggest that over-tourism is the primary concern for residents. However, for some, addressing resident fears by utilizing the latest project funds to help both social and environmental issues may offer the best solution moving forward.

“More than 36 percent of the Balearic GDP comes from the hospitality industry, so we need to ensure that [projects] are sustainable long-term and in conjunction with the general necessities of island residents to solve the collateral damage caused by tourism,” says Miró-Sans Gabarró.

This $11.7 Million Home in Ibiza Dates Back to the 16th Century