Tourism industry warns tax increases will hurt investment and competitiveness
Monday 7th September 2026 on 18:15 in
Iceland
Planned tax increases would damage investment and competitiveness in Iceland’s tourism industry, Jóhannes Þór Skúlason, director general of the Icelandic Travel Industry Association, told mbl.is.
Jóhannes said the scale of the direct tax increases proposed in the government’s budget bill had caused “enormous disappointment”. The association estimates that the increases affecting tourism will amount to 10 billion to 11 billion Icelandic krónur in total.
He said the figure should be viewed in the context of the industry’s annual profitability, which is around 20 billion krónur. Tourism companies already pay more than 200 billion krónur a year in taxes to the state and municipalities, he said.
“It is like receiving 300,000 krónur in wages after tax and then the state deciding to increase the tax by 150,000 krónur,” Jóhannes said.
He said the tax increases could reduce investment in the industry, affect employment and push prices in Iceland even higher. Iceland is already an expensive destination, he said.
Jóhannes also said it was “absolutely clear” that the state would not collect all the revenue projected from the measures. He pointed to the infrastructure charge on cruise ships, which he said had been introduced at too high a level and too quickly. A decline followed, meaning that the revenue did not reach the state treasury as expected, he said.
He criticised the introduction of new taxes at short notice and without sufficient assessment of their real impact on companies and tourists.
Iceland faces strong competition from other destinations, Jóhannes said, and prices influence where travellers choose to go. “We can at least state with certainty that no tourists will decide to travel to Iceland because the price on offer is even higher than it was last year,” he said.
He identified Norway as one of Iceland’s main competitors and said interest in the country had increased significantly, particularly after the football World Cup. At the same time, marketing efforts in Iceland had been inactive for the past four years, he said.