Photo/Illutration Tourists in Kyoto’s Higashiyama Ward in May 2024 (Asahi Shimbun file photo)

A growing number of local governments plan to cash in on Japan’s post-pandemic tourist boom by adopting accommodation taxes, and using the revenue to promote tourism and address related problems.

An Asahi Shimbun survey conducted in January found that 14 local assemblies have approved ordinances to introduce these taxes in fiscal 2025 or later.

Hokkaido, for example, plans to raise 4.5 billion yen ($30 million) annually by introducing a tax of 100 to 500 yen per night, depending on the price of the accommodation, starting in fiscal 2026.

“Many people are coming to Hokkaido from Japan and abroad after the novel coronavirus pandemic,” Hokkaido Governor Naomichi Suzuki said at a news conference in November.

“With the accommodation tax, we will make Hokkaido an even more attractive tourist destination and encourage even more people to travel here, creating a virtuous cycle.”

Miyagi and Hiroshima prefectures and the cities of Sapporo and Sendai are among the 14 local governments that plan to implement accommodation taxes.

The survey covered all prefectures and ordinance-designated major cities, as well as other municipalities that host popular tourist sites.

Akiko Kohsaka, an economist at Japan Research Institute, said discussions on accommodation taxes have resumed after the pandemic.

“The introduction of accommodation taxes is rapidly gaining momentum as local governments step up efforts to promote tourism on their own,” Kohsaka said.

The number of nights visitors stayed in Japan reached 596 million in 2019, dropped during the pandemic, but rose to a record 617 million in 2023, according to the Japan Tourism Agency’s Overnight Travel Statistics Survey.

The taxes had been introduced by only eight local governments, including Tokyo, Osaka and Fukuoka prefectures, by fiscal 2020. No local governments introduced accommodation taxes in fiscal 2021 or 2022.

One local government initiated the tax in fiscal 2023. It was followed by two others in fiscal 2024: Niseko town in Hokkaido, home to famed ski resorts, and Tokoname city in Aichi Prefecture, which hosts Chubu International Airport.

According to the Asahi Shimbun survey, 43 additional local governments, including Okinawa and Chiba prefectures, said they are considering concrete measures for introducing accommodation taxes.

Many local governments are increasing their existing accommodation taxes.

In January, the Kyoto city government announced plans to raise the maximum levy 10-fold to 10,000 yen in fiscal 2026 to combat overtourism and help repair cultural properties.

The rate, which applies to accommodations costing 100,000 yen or more per night, will be the highest in the nation.

“If we enhance Kyoto’s attractiveness, it will also benefit tourists,” said Kyoto Mayor Koji Matsui.

The city expects accommodation tax revenues to more than double to about 12.6 billion yen from about 5.2 billion yen in fiscal 2023.

However, concerns remain strong that an additional levy would dent tourist numbers.

In March, the city of Nara submitted a proposal to the municipal assembly to re-install a panel to discuss accommodation taxes, which had been put on hold due to the pandemic.

But the assembly did not approve the proposal, saying it is premature.

Many travelers visit sightseeing spots in Nara during the day but spend the night in nearby tourist hubs Osaka and Kyoto.

Operators of hotels and inns said they were opposed to a levy on travelers who choose to stay in Nara over rival cities. They also said the tax would further drive away tourists from Nara.

Shimane Prefecture has no plans to introduce an accommodation tax for fear of a decline in overnight guests.

“Cities, where diverse services are concentrated, not allowing people to stay overnight unless they pay taxes is the ‘logic of the powerful,’” said Shimane Governor Tatsuya Maruyama.

A local government may create an accommodation tax, a non-statutory, special-purpose tax, based on local conditions by establishing an ordinance.

The internal affairs minister must agree to its introduction unless the levy would become an excessive burden on residents or cause other problems. 

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