TAX NEWS - June 2010

Italy Tax: Rome hotels pondering new tax

Culture and history-lovers planning to take a trip to the Eternal City this summer may have to re-do their holiday budgets as hotels in Rome get set to introduce a new tax.

At present it is estimated that around nine million tourists visit the Roman capital each year, with the majority attracted by historic sights such as the Forum and the Pantheon, as well as the food and the fine weather.

Now, with the Italian government keen to cut back on the amount it lends to Rome each year, it has been revealed that plans are in place to introduce a special hotel tax.

According to supporters of the move, by adding as much as €10 a night to the cost of a hotel room, around €100 million a year could be raised, with the money to go towards easing the capital's rather sizeable debt and improving the country's credit rating as a whole.

However, unsurprisingly, hotel and tourism chiefs have hit out at the plans, with Bernabo Bocca, president of hotel trade association Federalberghi, telling Bloomberg that such a move would be "utterly stupid" and could serve to deter foreign visitors to re-think their holiday plans.

"Rome needs to compete with other cities worldwide, so to keep its position as a top tourist destination, any hotel tax should be accompanied with additional services and investments," added Chema Basterrechea, chief executive officer of NH Hoteles SA in Italy.

That said, other hotel operators are not completely opposed to the idea of introducing a selective tax, or more specifically, a new charge levied on the cost of a five-star room in a hotel in Rome, with some arguing that top-end travellers would hardly notice such an addition.

So far, Italian prime minister Silvio Berlusconi has stated that he won't rush into a decision on any hotel tax, suggesting that those holidaymakers already booked to fly to the city this summer could be in luck.

However, despite the controversy surrounding the move, such levies are hardly novel, with guests staying in hotels in numerous cities around the world required to contribute a little extra to the local economy.

Take Los Angeles, for example, where guests, whether they are backpackers or Hollywood royalty, are required to pay a 14 per cent hotel room occupancy tax.

Meanwhile, New York hotels are required to add a 14.75 per cent tax on their bills, while even laid-back Barcelona has a policy of adding seven per cent onto the hotel bills of its guests, with the money generated largely ploughed back into improving the tourist infrastructure.

As such, savvy travelers are advised to do their homework and budget accordingly before jetting off, as even the odd seven per cent here or there can quickly add up.