Proposed tourism taxes raise fears of layoffs in Árnessýsla

Tourism businesses in the upland districts of Árnessýsla fear proposed tax increases could lead to layoffs, less investment and a slowdown in the local economy, mbl.is reports. Jón Bjarnason, chair of Hrunamannahreppur municipality, and Bryndís Björnsdóttir, managing director of Laugarás Lagoon, criticised plans to raise value-added tax on bathing-lagoon admission and introduce a nature and infrastructure fee for visitors to Þingvellir, Geysir and Gullfoss.

Bjarnason said the changes would hit the upland districts particularly hard, where several bathing lagoons operate and significant development is under way. He said consultation with local residents had been inadequate and the timing was especially poor.

“We are simply worried about a significant slowdown in the region. We fear companies will lay off staff and the industry will become more concentrated,” he said. Bjarnason added that more destinations are opening without a corresponding rise in tourist numbers, leaving businesses to compete for the same customers.

Björnsdóttir said Laugarás Lagoon had made a strong start after opening on 15 October last year. The project represents an investment of nearly three billion krónur. It employed as many as 80 people over the summer and provides about 60 to 65 full-time equivalent jobs.

She said the business had also generated work for other local companies, including through its restaurant and its focus on buying ingredients from nearby suppliers. She argued that this supported the government’s aim of strengthening rural communities, while the proposed charges worked against that goal.

The plans discussed would raise VAT on bathing-lagoon admission from 11% to 24%. Björnsdóttir said businesses would have to pass at least some of the increase on to customers if the change went ahead. But she warned that higher prices could lead some visitors to skip a lagoon or choose cheaper activities.

Both speakers said tourists consider the overall cost of a trip. The proposed nature and infrastructure fee, combined with more expensive lagoon admission, could leave visitors with less money to spend elsewhere. Bjarnason said bathing lagoons also attract visitors to surrounding businesses, meaning the impact could extend beyond the lagoons themselves.

Björnsdóttir said tourism demand can change quickly and that Icelandic businesses compete with destinations abroad, not only with other companies in Iceland. She also noted that tourism is often sold well in advance: price lists for next year had already been distributed and agreements made with partners.