The tourist tax to replace the resort fee

From January 1, 2025, Russian cities will have an opportunity to introduce a tourist tax that is expected to replace the existing resort fee, and it will amount to 1 percent of the cost of accommodation (but not less than 100 rubles per day). Vologda, Tula, Sochi, and a number of other Russian cities have already announced the introduction of the tourist tax. Sergey Pozdnyakov, an expert in tourism, one of the founders of the National Association of Event Tourism Specialists, spoke about why the tourism industry needs this tourist tax and how this money can and should be spent.

- As of the beginning of November, 25 cities and three entities - the Kamchatka Territory, the Republic of Altai, and the Republic of Karelia - have announced the introduction of a tourist tax. Another 10 cities are considering this idea. Actually, a tourist tax is ready cash for any region, why isn’t every city in a hurry to introduce it?

- A resort fee is really a ready cash, and a tourist tax is something completely different.

- But the tourist tax money will remain in the entities (regions, territories, republics), won’t it?

- For now, it will really remain in the entities. But the tourist tax was introduced by the Ministry of Finance. And I don’t think that this ministry will leave all this money in a specific area.

The most amazing thing is that many financial issues were complicated intentionally. And it often happens - as law enforcement practice shows - that more money can disappear with non-cash payments than with cash ones. This is absurd!

At the same time, the regions do not have enough money for good purposes, there is no way to transfer money from one expense item to another.

The resort fee was introduced and it can be cancelled. But the tourist tax is unlikely to be cancelled, moreover, it is expected to be increased.

- Over five years, the tourist tax rate will increase from one to five percent of the cost of accommodation in a hotel room. This money is not that big for tourists, for a hotel room with a rae of five thousand rubles, they will have to pay additional 250 rubles per day. But still, won’t this make tourists to switch to guest houses and non-star hotels?

- They will definitely switch to them! Now, business of accommodating in apartments is rapidly developing. Many tourists choose this accommodation option instead of hotel rooms, the rates for many of which are sky-high now. For example, good hotel room rates can be about 8 thousand per night; and for the same money, a tourist can rent a two-bedroom apartment that is much more comfortable.

In addition, many of those who rent out apartments pay taxes. But they still do their best to keep apartment rates affordable for travelers.

A feature of the Russian mentality is moving into a ‘gray’ zone when control increases. And it seems to me that the hotel segment can also do so in case of the introduction of the tourist tax.

- Paying a tax is always a headache - albeit small - for enterprises. Will the costs of the tourist tax be put on shoulders of tourists through rising the hotel room rates?

- Hotel rooms will certainly become more expensive. We now have few places in Russia where tourists can come and check into a decent hotel. The hotel room rates in St. Petersburg and other cities popular with tourists have been raised, and they are expected to grow even higher.

- When the resort fee was introduced as an experiment, many experts talked about the difficulties with its control and spending - what exactly would the collected money be spent on. Will the same situation be with the tourist tax?

- I suppose it could be even worse. It’s a bit easier with the resort fee. Let’s say, 20 mn rubles were collected as taxes and the city uses this money to make, for example, benches and improve tourist locations.

The situation with the tourist tax is different. All taxes come, so to speak, into ‘one basket’. And as far as I understand, there is no such thing yet that money collected with the help of a targeted tax are spent on specific purposes.

- Is a tourist tax really required? This is a common practice abroad, but should we, as always, have our ‘own way’, or shouldn’t?

- We often ‘copy’ some foreign practice that is far from the best. And, of course, we want every small town in Russia to be really beautiful, like the towns in Switzerland or Germany. But this is not happening.

Secondly, even our towns and cities popular with tourists often are not well-kept. Let’s take Suzdal visited by a huge number of tourists, but the town is not well-kept. And why? Because, say, the town earned 300 mn rubles, and just 30 mn rubles normally remains in the town budget, and this is because all revenues were used to pay taxes. The situation is different abroad. When tourists visit the Baltic countries, Poland, and many other places, they can see very clean, nice towns, because the financing system in these countries is a little different.