Iceland plans tourist fees at state-owned natural attractions

Iceland plans to introduce fees for tourists visiting state-owned natural attractions next year, including Þingvellir, Gullfoss and Geysir, mbl.is reported. The measure is expected to generate 5 billion in additional state revenue.

Finance and Economic Affairs Minister Daði Már Kristófersson said Icelandic residents would not be charged, arguing that they had already paid for development at the attractions.

Kristófersson presented the government’s budget proposal on Monday. It forecasts a surplus of 5 billion next year, which would make it the first balanced state budget since 2019. The accumulated deficit since then has reached 866 billion, due to measures related to the pandemic, volcanic activity on the Reykjanes peninsula and other factors.

The proposal includes 22.6 billion in additional state revenue. The largest measures are a bank tax expected to raise 6 billion, the new tourism fee at 5 billion, a distance-based road charge bringing in an additional 4 billion, a change to the value-added tax classification of bathing lagoons raising 4 billion, and a reduction in housing-related VAT refunds expected to raise 3.6 billion.

Kristófersson said the tourism charges would likely begin around the middle of next year. The minister responsible for industry would present the measure.

He said the plan focused primarily on charging tourists. “The most obvious examples are Þingvellir, Gullfoss and Geysir, but the state owns a very large share of Iceland’s natural attractions,” he said.

The bank tax is due to take effect at the beginning of next year. Kristófersson said banks were receiving an unexpected windfall in an inflationary environment and that the state was seeking part of it.

He also said inflation was generally a windfall for the state, which had historically reduced its willingness to combat rising prices.

However, Kristófersson said most of the charges affecting banks resulted from rules set by Iceland’s central bank, which could reverse them. He referred to reserve requirements and capital requirements as measures equivalent to charges on banks.

Asked whether higher taxes on banks would simply lead them to recover the money from the public, Kristófersson said that would assume competition in the banking market was limited. He said he was not convinced that was the case.