Vietnam’s tourist tax canned

HANOI, 6 July 2017: Despite the temptation to boost Vietnam’s tourism promotion coffers through a tourist tax the country’s National Assembly, ditched the proposal when updating the country’s Tourism Law.

Vietnam National Administration of Tourism was the architect of the proposed tourist tax, which prompted a mixed response from the travel trade and hoteliers.

The controversial proposal to charge visitors a daily tourist tax was canned, although VNAT officials claimed they had achieved a victory by gaining approval for a new tourism development fund.

It was approved along with a raft of other amendments to the national law on tourism.

The focus of the amendments, due to take effect, 1 January 2018, is on creating channels to generate funds for promotions.

The annual budget for tourism promotion is currently around USD2.5 million, but officials say the amendments to the tourism law open up avenues to increase the promotional budget substantially.

Funds can technically be raised through visa fees and entrance tickets at attractions that were previously free to enter. The latter are more likely to generate the lion’s share of the funding as visa fees are dropping with the introduction of visa-free travel and eVisa arrangements.

The Vietnam National Administration of Tourism had earlier suggested a tourist tax paid nightly by foreign hotel guests.

But lawmakers concluded that there was not “legal ground to impose such a surcharge on foreigners.”

Hoteliers had opposed the proposal claiming it could impact on competitiveness when compared with neighbouring destinations such as Thailand.

Tourism authorities told local media earlier that Vietnam needs around USD22 to 31 million each year to fund promotions.

Vietnam’s culture and tourism minister, Nguyen Ngoc Thien, said the figure was well below what neighbouring countries in ASEAN were spending on promotions.

Vietnam earned an estimated VND400 trillion (USD17.6 billion) from tourism in 2016 as tourist arrivals exceeded 10 million. This year the figure could increase to 13-5 million.

By 2020 the country should welcome around 20 million foreign visitors and gain USD35 billion per year contributing 10% to the country’s economy, compared to the current 7.5%.

Despite the apparent need to increase promotional funding, Hanoi’s city authorities signed off on a USD2 million advertising campaign to be aired this year on CNN.