tourists in Lagos town
Photo: BRUNO FILIPE PIRES/OPEN MEDIA GROUP

Algarve tourist tax debate re-emerges

Hoteliers oppose proposed tourist tax for Algarve

The Algarve Municipalities Association (AMAL) is looking to introduce a ‘regional tourist tax’ in 2023, a proposal which is far from consensual among those in the tourism sector. Hoteliers fear its impact as Europe’s economic crisis deepens and threatens the sector, while Algarve tourism boss João Fernandes questions whether now is the “right time” to be reviving this topic.

The idea started being reported last week but has been officially confirmed by AMAL boss and Olhão mayor António Pina this week.

At the moment, only Faro and Vila Real de Santo António charge visitors a tourist tax in the Algarve. The plan is to extend the measure to any other borough that agrees with it, charging tourists €2 a day up to a maximum of seven days. Children under the age of 12 will be exempt.

Moving forward with a ‘regional tourist tax’ had already been discussed in 2019, but the idea was scrapped due to the outbreak of Covid-19. However, Pina believes that now the time is right to bring the topic back to the table, although he guarantees that it will only be implemented after talks with “all partners in the tourism sector”.

“We will first talk to the tourism partners, but the intention is to apply the same fee across all municipalities,” said the AMAL boss, adding that the idea is not completely consensual among Algarve municipalities.

Silves, for example, has remained faithful to its initial stance when the idea was first pitched and continues to oppose the plan, Pina said.

“The decision is not AMAL’s, it is of each of the municipalities. AMAL is only trying to reach a consensus on the criteria for the fee’s implementation, but if there are municipalities that decide not to apply the charge, then they don’t have to,” he stressed.

It has been suggested that the visitor levy could bring in around €30 million a year, which would then be spent in improvements to infrastructure and services across the Algarve.

“We are considering the creation of a Regional Fund that could be used to promote the region, as well as replenishing beaches with sand, or even issues related to Civil Protection,” such as wildfire prevention, he said.

The local authority also said that the value “has not yet been defined” but added that “€2 would be a fair amount, similar to what happens in the municipality of Lisbon”.

“The issue is still being discussed and, in my opinion, the fee should be the same across the region and come into force next year,” concluded António Pina.

Portimão mayor Isilda Gomes has already thrown her support behind the idea, saying that the municipality plans to go ahead with the ‘tourist tax’.

She also said she is “fully in agreement” with the €2 charge per person and per overnight stay.

“It is a fallacy to say that by charging this fee, fewer tourists will come,” the mayor told Lusa news agency.

However, the idea has not been well received in the tourism sector, particularly among hoteliers.

Speaking to SIC television news, Mário Azevedo Ferreira from the Algarve hoteliers’ association (AHETA) fiercely opposed the idea.

“Companies are already being forced to reflect the effects of the energy costs, inflation and the price of raw materials on the prices they charge,” he said, adding that the introduction of a ‘tourist tax’ at this time would have a “negative impact”.

“I dare say that, in general, companies do not agree with it and are very concerned,” added Azevedo Ferreira.

João Fernandes, president of the Algarve Tourism Board (RTA) and Algarve Tourism Association (ATA), has shared a more moderate point of view. While he does not completely oppose the idea, Fernandes questions whether now is the right time to introduce the additional charge.

“It does not seem like the best time to be returning to this topic, having just emerged from a two-year crisis of losses and with a new year approaching filled with uncertainties and alarming signs of inflation and economic stagnation, with an impact on rising production costs for companies and shrinking purchasing power of Portuguese and foreign consumers (which is particularly serious in our main markets, the UK and Germany),” Fernandes told the Resident.

He also said that RTA, along with hotel associations AIHSA and AHETA, had already pitched a series of measures to AMAL when the idea was first floated in 2019.

“At the time, we stressed that the impact of introducing a tourist tax on the competitiveness of a destination is not the same in a seasonal destination aimed at families (like the Algarve), as opposed to a city destination, where stays are shorter and tourists travel alone or in smaller groups,” Fernandes said.

“That is why our proposal pitched exemptions for under-15s, for stays of more than five days and different fees for the high and low seasons, to avoid the discouraging effect that the levy would have on families during longer stays and during the low season.”

The tourism sector also suggested the creation of a commission, which would bring together Algarve boroughs along with RTA, ATA, AHETA and AIHSA, to discuss how the revenue from the tax would be spent each year.

He also said that a municipal tax must also provide benefits to those who pay it, so that it is not seen as a government tax. Fernandes provided the example of Lisbon, where the municipal tourism tax revenue goes into the Lisbon Tourism Development Fund, used to promote the sector within the municipality’s sustainable growth strategy.

However, Fernandes revealed that a meeting is due to take place with AMAL to discuss RTA’s proposals further.

By Michael Bruxo
michael.bruxo@algarveresident.com