It has been announced many times and is now officially announced to be introduced on July 1: Venice’s day tripper tax. In their last communication on the topic, Authorities in Venice announced last October that at the start of the 2020 peak season, all visitors to Venice will start to pay for their visit to Venice. That means that current tax schemes are to be extended to that one group that has so far been untouched. Local authorities in Venice now have to solve an extremely complicated possible. They are facing an almost impossible challenge: How to introduce a tax on a special group of tourists that comes into the city from all sides and looks exactly like the other tourists.
Venetian authorities have to solve an extremely complicated puzzle.Avoid-Crowds.com
The main challenges
- Lots of groups do not have to pay the day tripper tax
- Venice can be accessed from all sides by numerous forms of transportation
- Hotel reservations might be major loophole for day tripper tax
- IT & communications investments needed
- Alternatives also not easily implemented
This hated group of no-good tourists will have to pay 8 euros ($8.76) during peak periods and 3 euros ($3.28) during off-peak periods. This new ‘day-tripper tax’ will solely be targeted at tourists that come to Venice without staying at least one night. Meanwhile, overnight visitors in Venice already pay a tourist tax through their accommodations. That means a large group of tourists will be exempt from the tax. Exceptions will also be made for ‘City regulars’: those visiting Venice for work, study or family reasons.
At Avoid Crowds we believe a fair and therefore proper implementation of the tourist tax is incredibly challenging. Venice is not a theme park with one or two entry points or exits. The design of the tax is incredibly complex as it excludes certain visitors to Venice such as those staying overnight or visiting families. Having transportation companies checking whether a very complex tax has been paid, makes enforcement too complex. This complexity of the tax in combination with the infrastructure of the city makes a good implementation of the tax so hard we believe it is impossible.
In this blog we will explain why such a day tripper tax will be extremely challenging to implement. The tax itself has its opponents and proponents. We will not look into arguments on whether taxing day trippers is the right thing to do or not. Our intention is to explore some of the major challenges that the Venetian government has to overcome before it can introduce a proper, fair tax that can be enforced while not negatively impacting the livelihood of Venice’s last inhabitants or tourists visiting the city.
Why taxing day trippers in Venice?
The main goal of introducing a tax on day trippers is to ease the effects of overtourism in the city that is struggling. Day trippers are often blamed for all overtourism related problems. They are blamed because this group of tourists does not stay overnight and unlike those staying at hotels do not pay tourist taxes. Meanwhile they fill the streets, leave trash behind and according to some even bring their own food (and more trash). In brief, day trippers are said to enjoy all the beauty the city has to offer while contributing nothing to the local economy. The now announced tax is intended to bring an end to this perceived injustice: anyone enjoying Venice shall pay.
To announce the introduction of the tax, Venetian mayor Luigi Brugnaro posted a two minute video on Twitter in early 2019. Similar to the not so real Venetian cruise ban, news about the ‘soon to be introduced day tripper tax’ quickly spread by news organizations around the world. In its original coverage, in early 2019, CNN.com reported that Venetians’ have mixed opinions about the measure as not all are convinced that it will tackle overtourism. Venice is a hot topic and to give you an idea how far news about the idea spreads, these are some other major news outlets reporting on the tax included The Guardian, Lonely Planet, CBS and Fox News.
Lots of announcements
Although the tax was announced to take effect in 2019, no taxation scheme has been put in place since today. Despite this seemingly inaction, a press release in October 2019 resulted in major news coverage for the measure again as local authorities announced a date at which the tax is planned to go into effect: July 1, 2020. Influential news outlets like USA Today or Skift reposted a message from Associated Press when a launch date for the tax was announced.
Although the tax has now been formally introduced twice, local authorities have failed to explain how the tax scheme will exactly look like. The biggest update that was given was that the tax would be levied through transportation companies bringing tourists to Venice. Such an implementation is of course possible but we wonder how that will be fair: it will either result in some visitors being double taxed or it will be relatively easy to avoid. So let us explain why.
Proposed tax scheme is too complicated & nobody will understand
Based on the widespread media coverage, we know a few things about the planned tax. It should be a tax solely focused on day trippers. Meanwhile, residents or Italians visiting relatives in the city should be exempt from the tax. In addition, those coming to Venice to work, while living outside the lagoon, should be exempt as well. The same exemption will be put in place for students and most likely some other groups.
Will tourists have to print out a piece of paper that needs to be checked by the transportation companies?Avoid-Crowds.com
According to the October update, transportation companies need to check each single passenger. The tax needs to be paid online before tourists set off to visit the city. How transportation companies need to check whether this tax is paid online is not clear. Do tourists show an app? Will tourists have to print out a piece of paper that needs to be checked by the transportation companies? Will that paper also show when people are exempt from the tax? Do all passengers need to carry some sort of prove that they are paying one tax or another?
The tax will be levied on all tourists that are not paying ‘Tassa di soggiorno’ or accommodation tax. The tax is expected to be levied through the official transport services. That means that the companies that bring people into Venice are responsible for levying or checking whether the tax has been paid. According to the latest information on the tax, tickets need to be booked into advance otherwise, tourists cannot enter transportation to Venice.
Meanwhile, checks and fines will be introduced. Single tourists can be fined up to 450 EUR if they are caught evading the tax. Transportation companies failing to properly check whether the tax is paid can be fined much heftier fines. But with so many exemptions, how will they be able to do that? Enforcing a complicated tax is not a skill that most bus drivers or ACTV staff will have.
Introducing a complicated tax like this, while shifting the burden of enforcing the tax to bus drivers and ACTV staff, will proof too complicated and too expensive. Due to the many exemptions and fluctuating fees, it will require lots of training for transportation companies and local authorities to understand how it works. Tourists will not understand the tax either. How do you know who is exempt and who is not? Support for a tax like this will not be big which will most likely lead to massive tax evasion.
Venice does not have a single point of entry
Taxing day trippers through their means of transportation is a proved concept. In Amsterdam, a similar tax is levied on cruise passengers. Venice intends to introduce a tax like this on all incoming means of transportation such as trains, cruise ships and coaches. But what about people using their car and parking in and around Venice. Will they be taxed as well? Will they pay per person or car? What about a car with five people and only one parking the car? What about those walking into the city?
The biggest challenge of the day tripper tax is how to ensure that all those visiting the city will be equally taxed and equally checked. Unlike a theme park, Venice is a living and breathing city with visitors coming in from all sides. Although access for cars, trains and coaches are centralized, Venice can be accessed over the water from all directions. You can hop on public transport from many different parts in the lagoon to enter Venice. For example, you can park your car in Fusina and jump on an ACTV towards Venice. Water taxis can also bring you from the mainland into the city.
Levying a day tripper tax by charging all public transport in the lagoon is not an option either. Many tourists in the lagoon are actually not going into the city. There is also considerable local tourism in nearby areas such as Lido, Chioggia and nearby beaches. Checking passengers while entering their transport outside Venice but in the lagoon is not an option. Checking them upon disembarkation will lead to chaos and make ACTV highly inefficient.
Any system that will be introduced needs to overcome the problem that Venice is not gated and does not have a single-entry point. Investments in turnstiles or surveillance will easily offset the proceedings of the tax. Not only that, any effort to install entry points in the city is unwanted as it will make Venice feel more like a theme park. The livability and touristic experience of the city might deteriorate due to such measures. As a result, the tax might actually contribute to overtourism rather than fighting it. Local residents will oppose such measures.
Venice day tripper tax requires major IT investment
Forcing tourists to pay the tax before their arrival online and making transportation companies responsible for enforcement requires a massive IT investment. The very least that is needed to ensure such a tax can be implemented is a website where tourists can buy a tax ticket. That website needs to deal with fluctuating taxes, be available in lots of languages, process personal information and needs to have a safe online payment platform. Meanwhile, all exemptions need to be clear as well. Otherwise some staying overnight will be paying double.
The associated costs and risks need to be paid by the Venetian taxpayer. At the same time, the city needs to train and set-up major communications programs and launch enforcement initiatives. In 2022, this system will be replaced by more automated forms of checking. That sounds like turnstiles or other forms of check points.
Although this plan will result in considerable tax income, it will create an unimaginable bureaucracy for which local transportation as well as public money that is spent on a very risky project. Meanwhile, the efficiency of transportation in and outside the lagoon will come under further pressure. This pressure will come from checks by the transportation companies and/or local authorities as all tourists boarding trains, boats or parking their cars need to be checked.
Hotels seem to be a major loophole in the plan
One of the biggest challenges for a proper introduction of a day tripper tax is the exemption of tourists staying in hotels. How do tourists staying overnight provide bullet proof that they are exempt from the day tripper tax? As explained before, tourists staying in a hotel, B&B or other touristic accommodation in the lagoon are exempt from the tax. This exemption is put in place to avoid that these tourists pay double. What is absolutely unclear is how the city will handle this exemption. Will these tourists also be forced to register for the tax? For example, by filling out some information about their reservation? If not, how will transportation companies enforce the tax if some people can simply state they are staying a hotel. Even if they do need to carry proof when they enter Venice, this creates several other problems:
Most hotel reservations can be cancelled
Hotel reservations can be made and cancelled just before arrival. Although this often costs more than a prepaid hotel room, this causes some headaches for those designing the Venice day tripper tax. You can for example book a hotel room, print out the confirmation and then cancel the hotel room. That will give you proof of a hotel stay without actually having one.
A way to mitigate this risk, is to have tourists pay for the day tripper tax upon booking. That might be problematic too. For example, when you have paid the tax upon booking and your plans change. For example, you cannot make the trip to Venice due to family circumstances, do you then pay the tax while not going to Venice? That is not fair. But even if you end up going to Venice you might end up paying double: for example, when you book another hotel in Venice and cancel the first. What will happen with the paid tax in that scenario?
Hotels can be booked at arrival
Although not very common amongst tourists visiting Venice in 2020, hotels can be booked at the check in desk. How will this kind of reservation influence the tax? If you do not have a pre booked hotel will you pay double tax? Or can you simply state an intention to book a hotel on arrival? That would make tax evasion incredibly easy. Or would you be able to get your day tripper tax back if you can show you stayed in a hotel? That would make the tax very bureaucratic, the IT investment more expensive, and far from user friendly. A not user-friendly tax will by itself will be an incentive to evade the tax.
Tax vouchers by hotels too complicated
Another option would be for hotels to provide tourists with registration codes or vouchers for the tax. Tourists can then redeem these vouchers online when they register for the tax. This will require considerable investments by local authorities as well as hotels or websites and potentially even booking websites. Meanwhile, less digitally adept people will not be able to visit Venice anymore. Furthermore, this will be very difficult to explain to regular tourists not used to measures like this.
Tax will be difficult to understand
The tax is announced as a dynamic tax that will be more costly on busy days and more affordable on days when less tourists are expected to visit the city. Aim of such a dynamic tax scheme is to disperse tourism over time. Based on the announcements by the city we know this tax will be EUR 3, 6 or 10. What is not clear is whether it will be EUR 3 on low season days and EUR 10 on peak season days and whether weekends are more expensive than other days. Meanwhile, the fee structure seems to have changed and the highest price is now EUR 8. Meanwhile, cruise passengers pay a flat fee that is different from the regular fee structure.
Not only do the fees change every round of communications, the dynamic tax scheme creates problems by itself. How will tourists know what tax will be levied on what day? Why is there a difference between cruise ship passengers and other passengers? Can a cruise passenger also buy the alternative cheaper or more expensive ticket? What will happen to cruise passengers that also stay in hotels? Will they be exempt? If not, why are they forced to pay double tax and others not?
The city will have to invest heavily in communicating how the tax will work. That investment comes on top of the IT-related costs that was outlined previously. These costs will also impact how much the city will benefit from introducing the tax. In addition, double taxation will give people a sense of unfair treatment and will be an incentive to try to to evade the tax.
Our conclusion: implementing the Venice day tripper tax is incredibly challenging
Although taxation of day trippers seems fair, it is close to impossible to levy a fair and inclusive tax. A fair tax would mean making exemptions for tourists already paying other forms of tourism taxes. This is exactly what the local government tries to do but it is incredibly difficult to implement and even more difficult to understand.
An alternative might be to get rid of all other form of taxation and replace it with a tax levied on all tourists each day that they stay in Venice. A tax like that is fair(er) since it impacts absolutely everybody. It is also easier to enforce since anyone needs to be checked and there are no exemptions amongst tourists. Those living, working or studying in the city can still be exempt. However, Venice is not gated, you can still access the city from all sides. Perhaps it is not easy to implement anything. Good luck local authorities!
Other impossible options for the Venice day tripper tax
We explored several other opportunities to introduce a day tripper tax in Venice. None of these alternatives seems to be viable.
- Extending current systems not an option
An alternative solution for the tax might be too extend the Venezia Unica system. Through this existing system local residents or those working in Venice currently get discounts and quick access to public transport. ‘City regulars’ can apply for the system after which they get access to services that make life in Venice somewhat easier for local residents.
To exempt residents and other city regulars from a day tripper tax, the Venezia Unica pass could potentially be used to differentiate between those living and working in Venice and tourists on the other side. There are some problems with this solution: tourists can currently buy the pass for 100 EUR. In addition, those visiting family or those irregularly working in the city will not be able to get the pass or it will be too complicated. This can be the case if it takes too much time or too much effort. In addition, the system is only in place on limited locations and do not limit access to (parts of) the city.
A system like this cannot be used to differentiate between day trippers and those tourists that are exempt from the tax (those already paying through their hotels). The only way of using this system would be to stop taxing through hotels. Furthermore, the city can be enjoyed without the current systems. You can decide to only walk in the city or to take taxis. Usage of the system can be avoided too easily.
- Introducing a new pass system
As extending existing systems might proof too complicated or not feasible, the city might introduce an entire new system or a system in addition to Venezia Unica. This could be in the form of a physical card that can be shown at entrance points to the city. For example, by introducing turnstiles near Venice’s train station and cruise ship terminal. City regulars can receive a special pass that exempts them from the tax.
The problem here is that the city will not be able to easily exempt those tourists that are not day trippers but stay overnight. These tourists already pay a tax through their hotels, how to exempt them? An option would be to have hotels hand out passes to these tourists. But how can that can only be done after they arrive at their hotels. In order to get to their hotels, they already have to go through checkpoints or turnstiles. A possible rebate or discount model will make the system more complicated and create a communication and paperwork nightmare for both hotels and the city. Sending out passes digitally or physically will make the program very expensive.
Other more viable options
Tourist tax not day tripper tax
As described in our conclusion another option would be to introduce another form of tourist tax: a daily fee regardless of how you are visiting the city. With a tax like this all tourists are equally paying their share for staying in the city. The big challenge for a tax like this is how to enforce it. You would need to set-up check points or find other smart ways of automatically checking whether such a tax has been paid. A solution like this will also impact those visiting relatives living in Venice. Is it fair to tax them?
Limited and timed entrance to major highlights
Not all parts of Venice are equally impacted by overtourism. San Marco Square and several other areas are heavier impacted than other parts of the city. These areas can be sealed off relatively easy and this has already been done in Venice (Carnival) and other cities. In peak season the number of tourists can be limited in these areas while timed entry ensures that all tourists have the opportunity to visit these highlights. Similar measures have already proven successful in other tourist destinations like Machu Picchu, Granada’s Alhambra and other places suffering from overtourism. (Idea is not ours, @PetraReski brought the idea by Fabio Carrrera’s to our attention).