Northern municipalities criticise proposed bath lagoon tax increase

The Association of Municipalities in Northeast Iceland has warned against raising value-added tax on bath lagoons and other tourism services, mbl.is reported. The association said such measures could harm investment, year-round operations and jobs in other parts of Iceland.

In a resolution adopted at its annual autumn meeting last week, the association said decisions that might be justified by the tourism sector’s stronger position in southwest Iceland could carry significant costs for rural regions.

Local government representatives in the north said the authorities must consider rural interests when changing taxes. They also called for greater predictability in government decisions affecting operating costs, investment, transport conditions and the competitiveness of tourism businesses in the region.

“Uncertainty about charges, flight connections and other transport conditions reduces the willingness to invest and delays development in areas where tourism is still evolving,” the association said.

It added that measures such as an infrastructure charge on cruise ships could significantly affect ports, service companies and destinations outside Iceland’s largest tourism areas. Such measures should therefore be based on a clear assessment of their regional impact before being introduced, the association said.

The aim should be for public policy to support sustainable tourism development throughout the country, rather than weakening growth opportunities and jobs in rural areas through measures primarily designed around conditions in Iceland’s largest and strongest tourism regions.