Hafsteinsdóttir calls on government to drop tourism tax plans

Guðrún Hafsteinsdóttir is urging Iceland’s government to abandon a planned visitor charge and a proposed rise in value-added tax on bathing lagoons. In an opinion piece published by Morgunblaðið, she says the measures could harm tourism businesses and jobs across the country.

The planned nature and infrastructure charge would apply to visits to Þingvellir, Geysir and Gullfoss, all in Bláskógabyggð. The general fee would be 4,500 krónur for each adult visitor who is not tax-resident in Iceland. Hafsteinsdóttir says the government expects to raise six to seven billion krónur a year for projects intended to benefit tourism nationwide.

She argues that businesses in one municipality should not carry a special burden when the three attractions draw visitors whose spending supports companies well beyond local boundaries. The proposed charge, she says, could discourage visits and reduce business for nearby operators.

Hafsteinsdóttir also questions the government’s infrastructure rationale. She cites the bill’s explanatory documents, which say the fee is not intended to reflect the cost or impact of individual visits, and says the revenue would not be earmarked for improvements at the attractions.

At Þingvellir National Park, the government also plans to abolish parking fees and compensate the park for the lost income through state funding. Hafsteinsdóttir questions replacing the existing revenue source with a centralised collection and monitoring system that would require more administration.

She says tourists already pay taxes and fees through accommodation, transport and other purchases, and argues that further charges could lead visitors to choose another country or spend less in Iceland, affecting both businesses and state revenues.

The proposed VAT increase would raise the rate on bathing lagoons from 11% to 24%. Hafsteinsdóttir says the lagoons attract visitors and support year-round jobs, while also bringing business to nearby accommodation, restaurants and other services. She warns that the higher tax could constrain investment and make it harder for operators to stay open through winter, and would also affect Icelandic visitors.

A Deloitte analysis presented to the Icelandic Travel Industry Association at a meeting in Selfoss last week put planned tax and fee increases affecting the sector at 10.7 billion krónur, Hafsteinsdóttir says.