OPP Meeting Summary: EP TRAN Committee – Presentation by the European Commission of a study on taxation in tourism and of a Commission Staff Working Document on Nautical Tourism (9 November 2017)

A summary of the Policy Department’s presentation on taxation in tourism and of a Commission Staff Working Document on Nautical Tourism is now available.

EP TRAN Committee Meeting – 9 November 2017
Tourism Task Force:
· Presentation of a study on taxation in tourism by the European Commission, DG GROW
· Presentation by the European Commission of Commission Staff Working Document on Nautical Tourism – SWD(2017)0126

Presentation of a study on taxation in tourism by the European Commission, DG GROW

The Representatives from the Commission made the following opening remarks

  • the share of tourism being attributed to the EU on the global level had fallen considerably and stabilised in the last 5 years at around 40% of global tourism;
  • however, the share of tourists visiting the EU has risen continuously;
  • the falling share could be explained by an overall growing global tourism market, the fact that the global rise in wealth led to more tourists visiting long-term destinations and by the declining security in neighbouring countries of the EU, such as turkey or North Africa;
  • the study found significant variations of taxes across the EU Member States (MS);
  • especially occupancy taxes which were levied on a short-term bases were applied in two-thirds of MS affected tourism;
  • most MS had reduced their VAT rates on goods and services related to the tourism sector, such as accommodation and passenger transport, but had only a limited range of action to further reduce them with half of the MS already applying the lowest rates possible;
  • they had evaluated three case studies:
    • Cyprus:
      • applied very low taxes
      • the government was diversifying its tourism offers allowing it to also attract more “niche, year-round and luxury tourism”;
    • the Balearic Islands:
      • applied very extensive taxes due to very strong regional autonomy in setting them;
      • recently introduced a new occupancy tax called “sustainable tourism tax”;
    • Paris:
      • also applied an extensive range of taxes on its tourism sector;
      • the sharing accommodation sector, such as AirBnB and other platform providers, was very big which is why taxes were collected by the platform providers rather then the individuals;
  • the key economic findings:
    • Employment:
      • tourism industry across the EU comprised of 2 million enterprises, the majority being SMEs, employing 5,2% of the entire workforce;
    • Quality matters:
      • both price and quality factors jointly contribute to tourism demand;
    • Occupancy taxes:
      • although they ranged from €0,40 to up to €7 per night, the research did not suggest a clear effect on hotel stays, but the effect might be significantly larger in cases were the quality was lower
  • Recommendations:
    • Reduced taxes on tourism can increase the competitiveness of tourist destinations and bring wider economic benefits. However this needs to be balanced against a loss in short-term revenues, and cross-sector and cross border implications;
    • The perceived uniqueness of a location has a bearing on the effectiveness of its tax regime, and governments can influence this;
    • How a tourist tax is introduced and administered has important implications for how the sector responds to it;
    • Compliance issues should also be considered to avoid occupancy taxes from becoming a burden on compliant businesses, especially with regards to the rising sharing economy;
    • The visibility of occupancy taxes is not just an administrative issue, but may also have implications for consumer behaviour;
    • Occupancy taxes inherently favour some tourists over others, and should be designed or reformed with equity issues in mind.

Luis de Grandes Pascual (EPP, ES)

  • pointed out that the reason for different variations of taxes in the MS was the result of ideological considerations, for example the conviction of using the money to protect the environment;
  • increasing taxes on the tourism sector would “kill the industry” and cause job losses.

Izaskun Bilbao Barandica (ALDE, ES)

  • in order to maintain the quality of sustainable tourism in the whole EU, especially in emerging tourism destinations, the right choice and amount of taxes was essential, while mass tourism would produce significant damage;
  • called for a minimum of harmonised rules on the EU level setting out where the tax revenue was spend on.

Marie-Christine Arnautu (ENF)

  • the key message of the study was that low taxes on tourism attracted tourism, a well known fact, which is why she questioned the utility of the study;
  • all economic actors in tourism should be subject to taxes first before conducting studies on their effects;
  • the fundamental problem for tourism, especially for France, was security.

Jill Evans (Greens/EFA, UK)

  • the benefits of reducing VAT rates and the importance of the uniqueness of locations had become clear;
  • called for more evidence on the effect of what the money was spend on the ability to foster sustainable tourism.

The Representatives from the Commission answered

  • the occupancy taxes were levied in instances where the tourists booked their location or when checking out of their accommodation, while longer stays of over one week were usually exempted;
  • the resulting disadvantages of those taxes on the economy were fairly low due to their low price;
  • instead the overall prices in the destinations, in particular in the so-called “sun and sand destinations” where competition was high, were essential;
  • the uniqueness of the destination in terms of environment and context of tourism determined the ability to set higher taxes;
  • where those taxes ended up was not always transparent and they often were used on other things than environmental aspects;
  • the tourism customers were very flexible in their choice of destinations, which is why in cases of major price disparities they chose to travel to non-EU countries.

Presentation by the European Commission of Commission Staff Working Document on Nautical Tourism

The Representative from the Commission made the following opening remarks

  •  coastal and maritime tourism was one of the sectors identified as having a major growth potential in the blue growth strategy adopted by the Commission in 2012;
  • the coastal and maritime strategy adopted in 2014 then aimed at stimulating the competitiveness and performance of the sector, promote skills and innovation, strengthen sustainability and maximise the effect of EU funding;
  • the sub-sector nautical tourism included activities performed by 1 in 10 EU citizens and over 6 million boats were kept in EU waters;
  • the sector faced several challenges:
    • the increasing age of skippers to 45 years over the last 10 years;
    • the lifespan of yachts of 40 years was coming to an end in a majority of cases;
    • diverging interests of tourists;
  • on the first area of skippers licences
    • the charter business/sharing economy was expected to grow;
    • private licences were not automatically recognised across the EU creating a loss of revenue;
    • a common curriculum for skippers was currently established in several pilot projects
  • onboard safety equipment
    • there were often two devices fulfilling the same objectives depending on the jurisdiction across the EU;
    • either national rules had to be set aside, to allow for the EU regulation to apply, or common standards had to be established;
  • development of marinas and boating
    • investment and innovation required, while fragmentation had to be overcome;
    • marinas had to be promoted as “profit centres for the hinterlands” and for bridging seasonality and volatility
  • boat recycling:
    • 80,000 reached their “end of use” this year;
    • 2,000 were dismantled while the rest was abandoned, sent to landfills or sunk;
    • the recycling market for end-of-life boats was slow to develop, contributed to the circular economy;
  • conclusion
    • need for well-functioning Single Market;
    • barriars for skippers had to be removed;
    • the circular industrial innovation had to be enabled by promoting digitisation;
    • diversified and combined products were needed to link maritime and coastal communities.

Luis de Grandes Pascual (EPP, ES)

  • nautical tourism significantly increased the value of the tourism sector for the concerned countries;
  • low-cost operators produced distortions of the tourism market and had negative impacts on sustainability.

Izaskun Bilbao Barandica (ALDE, ES)

  • asked about the effects of the maritime on the fisheries sector.

Gesine Meissner (ALDE, DE)

  • the whole picture of tourism and transport as well as the inclusion in the blue growth agenda had to be taken into account to foster an integrated maritime policy.

Pavel Telička (ALDE, CZ)

  • the nautical transport sector had a large impact on the free and cross-border provision of services and freedom of movement across the EU;
  • the important effect on tourism required stronger recommendations on how to remove the existing barriers.

The Representative from the Commission answered

  • the fishery sector was mentioned as an important contributor to nautical tourism in the document and the latter benefitted the diversification of employment activities;
  • the Commission was working on possibilities for harmonising the existing rules on driving licences.

Source: One Policy Place

The simultaneous interpretation of debates provided by the European Parliament serves only to facilitate communication amongst the participants in the meeting. It does not constitute an authentic record of proceedings. One Policy Place uses these translations so this text is only a guide and should not be relied on as an official account of the meeting. Only the original speech or the revised written translation of that speech is authentic.

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