Movement to introduce “accommodation tax” spreads Local governments to recover visitors to Japan and promote tourism

Niseko real estate News

Local governments nationwide are moving toward the introduction of an “accommodation tax” to be imposed on hotel guests. The aim is to promote tourism as the economy normalizes due to the transition to Category 5 of the new coronavirus infection and the number of inbound tourists (visitors to Japan) is also on a recovery trend. About 20 years have passed since the introduction of the national first, and the Tokyo metropolitan government is considering a review, including a raise.

The accommodation tax is one of the non-statutory purpose taxes that can be established independently by local governments based on ordinances and collected after specifying the usage in advance. In general, lodging operators collect the fees by adding them to the fees and pay them to the local government.

The tax was introduced in 2002 by the Tokyo metropolitan government, and the tax amount is 100 yen for accommodation costs of 10,000 yen or more and less than 15,000 yen per person per night, and 200 yen for accommodation costs of 15,000 yen or more. The tax revenue will be used to promote the tourism industry, such as the development of Wi-Fi and the operation of tourist information centers.

According to the metropolitan government, tax revenue has been on the rise since FY2011. In fiscal 2019, it reached a record high of about 2.7 billion yen. In fiscal 2020 and 2021, sales dropped sharply due to the coronavirus pandemic and the suspension of taxation associated with the Tokyo Olympics and Paralympics.

On the other hand, promotion expenses for fiscal 2011 are expected to be approximately 26.4 billion yen, which is significantly different from tax revenue. Some local governments are latecomers and set higher taxes than the capital, such as Kanazawa’s 500 yen and Kyoto’s 1,000 yen. “The situation surrounding the accommodation tax will change in 20 years, and it is necessary to consider a review from the perspective of fairness,” said a metropolitan government official.

Outside of Tokyo, six cities and towns in two prefectures have established an accommodation tax, and an increasing number of local governments are aiming to establish new ones, such as Atami City in Shizuoka Prefecture and Okinawa Prefecture, where tourism is the main industry.
The city of Nagasaki, which introduced the system in April this year, aims to create a virtuous cycle in which tax revenues are used to enhance tourist facilities and increase the number of guests. “We want to revitalize the region by increasing the non-resident population,” said the person in charge of the project.

The international ski resort, Kutchan-cho, Hokkaido, located in the Niseko area, is the only one that does not have a fixed rate but a fixed rate system that collects 2% of the room rate without meals. Many condominiums charge hundreds of thousands of yen per night, and users of luxury facilities pay more. “If the number of customers returns to the pre-coronavirus level, we can expect a lot of tax revenue,” said an official.

Upon introduction, issues such as tax amounts and rates, collection mechanisms, and usage will become issues, and the understanding and cooperation of the local lodging industry will be essential. Kanekiyo Morita, 55, chairman of the Atami Onsen Hotel and Ryokan Cooperative Association, said, “There is concern that customers will drift to other tourist destinations, but with the city’s tax revenues declining due to an aging population and a declining population, we need financial resources to promote tourism. We want them to be used for measures that increase convenience and satisfaction.”

Professor Tomoya Umekawa of Kokugakuin University (Tourist Area Management) 　While the population is declining and local finances are getting tougher, investment costs such as tourism promotion tend to be put on the back burner, but by introducing an accommodation tax borne by tourists who are the beneficiaries, a certain amount of revenue can be expected. To avoid creating a sense of unfairness, it would be better for local governments to put in place a system to properly collect money from all eligible people, and to publicize how the funds are used on their websites and posters. One example is the use of multilingual support for inbound tourists (visitors to Japan) and barrier-free facilities for the elderly and people with disabilities. I want you to make good use of the accommodation tax and increase the appeal.

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Niseko real estate company CEO’s perspective

Hokkaido’s Kutchan-cho, which is located in the Niseko area, is the only one that collects a fixed rate of 2% of the room rate without meals. Niseko Town is also considering a fixed rate system. Many lodging businesses are concerned about the increase in clerical work due to the labor shortage, and it seems that it will take some time to introduce it.

Niseko Town Accommodation Tax