Governments around Japan eye lodging tax to offset impacts of tourism

Local governments are allowed to adopt an accommodation tax by ordinance.

The Tokyo Metropolitan Government became the first to introduce such a tax, in October 2002, charging ¥100 to ¥200 per person per day for rooms costing ¥10,000 or more. The Osaka Prefectural Government followed suit last January, introducing a tax of ¥100 to ¥300.

The Hokkaido Prefectural Government and the city governments of Kanazawa, Kyoto and Nagasaki are among those studying the introduction of such a tax.

Kyoto is especially eager to introduce such a tax due to limits on its local tax revenue from the concentrated presence of temples and shrines exempt from fixed asset tax, and its large population of students.

In fiscal 2014, Kyoto’s tax revenue per capita was ¥14,000 less than the average revenue of other ordinance-designated major cities.

In August, a panel of experts appointed by the city proposed introducing an accommodation tax levied on all guests at hotels and inns. Revenue from the proposed tax would be used to address problems raised by citizens as a result of sharp increases in the number of tourists, such as road congestion and increased garbage, a municipal official said.

With many local and prefectural governments facing financial restraints, an expert panel set up by the National Governors’ Association issued a report stressing the need for a new tax revenue source to address the ever-increasing number of inbound tourists.

The panel offered such options as introducing legislation on a uniform accommodation tax, applicable to all local governments in place of the current system which allows them to adopt levies individually through ordinances.

Early legislation is not likely, but the report may help promote discussions in local governments on introducing an accommodation tax by ordinance, a senior official of the association said.