Tokyo to adopt municipal accommodation tax in Japan

TOKYO Kyodo - The practice of imposing municipal accommodation taxes on hotel guests has been expanding across Japan as popular tourist areas look to generate money to promote themselves to tourists in the wake of the COVID-19 pandemic.

Tokyo is planning to increase its tax for the first time since it became the first area in the country to implement the system in 2002.

In the capital, hotels charge 100 yen per person per night for stay, which ranges from 10,000 yen to 15,000 yen and 200 yen per night for rooms over 15,000 yen. The tax is earmarked for protecting free public Wi-Fi and serving tourism information centers, which is a part of the collected tax.

The Japanese government has said that revenue collected has been increasing since 2011, reaching a record level of around 2.7 billion yen in fiscal 2019, but it fell in 2020 and 2021 because of pandemic travel restrictions and a suspension of the system during the Tokyo Olympics and Paralympics.

With the recent return of international tourists, the total is expected to recover in fiscal 2023 to about 1.7 billion yen. Some municipalities have adopted flat fees lower than Tokyo's, with cities and prefectures free to set their rates. Guests in Kanazawa and Kyoto must pay a flat rate of 500 yen and 1,000 yen per night, respectively.

The situation surrounding the accommodation tax has changed over the last 20 years, so we need to consider a review from a fairness perspective as well, a Tokyo metropolitan government representative said.

Two prefectures and six municipalities in Japan have followed Tokyo's lead and have adopted the system, while others, including the city of Atami in Shizuoka Prefecture and Japan's southernmost prefecture of Okinawa, are considering it.

The town of Kutchan in Hokkaido, home to the famous ski resort Niseko, is the only place that has implemented a percentage tax rate based on the amount spent on accommmodation. The cost of a room is amounted to 2 percent, while for luxurious hotels, such as condominiums in the area that cost more than 100,000 yen per night.

Adopting the accommodation tax in areas yet to do so will necessitate setting tax rates, collection methods, and defining areas it will be spent, necessitating the understanding and cooperation of the local hotel industries.

There are worries that adopting the system will lead to visitors going to other locations, but we need the funds for promoting tourism, as the city's tax revenue falls amid the aging of and decline in the population, said Kanekiyo Morita, 55, who heads the Atami Hot Spring Ryokan and Hotel Association.

We would like it to be used toward policies that will improve convenience and satisfaction, he said.