Laos slaps a dollar tax on tourists

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VIENTIANE, 2 October 2018: Almost forgotten but on the brew for years the much talked about tourist tax was quietly introduced at all of Lao PDR’s border checkpoints 1 October.

Proposals for a tourist tax to help fund tourism development and marketing first surfaced in 2010, a subject that was roundly criticised as yet another tax on foreign visitors.

It was mooted as a practical measure to raise around USD3 million to fund marketing at the time, but the role has been widened to embrace tourism development.

Even in Laos there are signs overcrowding particularly in Luang Prabang during the peak season, November to March, which could give the the tax a dual role of funding heritage protection and ultimately applying a brake to avoid ‘overtourism’ in the world heritage town.

But it would have to be considerably more than USD1 to achieve that goal and probably critics would suggest a daily ticket cap on temple tour visitors as a more appropriate measure.

Laotian Times broke the news on the new tax, 29 September, reporting that all foreign passport holders, including those who have residency permits would have to pay the USD1 tax at international border immigration checkpoints.

The tax was authorised by a government decree issued in April 2017 according to Laotian Times.

It is understood that border pass holders – local residents crossing the border from Vietnam and Thailand to Laos on day-trips – are exempt from the dollar tax, but local newspapers, Vientiane Times and Laotian Times suggested border pass holders were included. There has been no clarification on whether travellers can pay with other currencies, set at the current exchange rate for the US dollar.  As is always the case the Ministry of Tourism’s website and the official tourismlaos.org site as well as their Facebook pages feature no relevant announcements to offer clarity.

Based on tourist arrivals in 2017 that reached 3.8 million, the USD1 tax would raise a respectable treasure chest to support tourism development.

The country justifies the tourist tax by saying it will be used to upgrade tourism, while supporting the country’s budget for flood disaster recovery efforts as well as unidentified infrastructure investment.

Based on that policy statement, the tax could be used for non-tourism related projects, which would fall outside the original proposal to employ funds entirely for tourism promotion.

Back in 2010 the Laos Tourism Marketing Board (LTMB) recommended that a new tax of USD2 be levied on all tourists visiting Laos.

At the time the board, which was permanently chaired by the Lao National Tourism Administration, said the tax would finance a PR and marketing campaign.

Over the years Laos raises considerably funds from fees or taxes that tourists pay.

There are at least four different taxes or fees starting with the visa fee of USD30 to 45, which goes to the Ministry of Foreign affairs and Immigration, an overstay fee of USD1 to 2 per day, which goes to the customs department and provincial authorities, a fee of USD2 to 5, which goes to the Ministry of Tourism and LNTA, and now the tourist entry tax of USD1.

Travel companies in the past have been critical of the various taxes saying they should be simplified, streamlined and made transparent. They argued that having too many small locally administered taxes creates opportunities for corruption.

It could also become a pain point for travellers who are not aware they need to have a US dollar handy at an airport. Not to mention checkpoint congestion caused by yet another queue in the arrivals hall.  The prevalent trend is to reduce queues and free up space in crowded checkpoint areas. There are already enough delays at airports and land checkpoints without adding yet another layer and it might turn out that the cost of collection exceeds a dollar when all expenses are factored into the equation.

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