By Takahiro Yamamoto and Ryoji Fukazazwa / Yomiuri Shimbun Staff Writers
The Osaka prefectural government is giving serious consideration to introducing the nation's first fee system targeting foreign tourists, a proposal it first made earlier this year to finance measures against overtourism.
Inbound demand has been recovering rapidly following the end of COVID-19 as a public health emergency. The proposed fee system would include charging each foreign tourist \100 to \300.
But many hurdles stand in the way, including the possibility that such a system would violate tax treaties requiring equal treatment of foreigners and Japanese nationals.
Expert panel discusses issues
Osaka Gov. Hirofumi Yoshimura, speaking at a prefectural assembly meeting in March, expressed his intention to work toward introducing the fee system in the prefecture. The envisaged system resembles a tourist tax that would be levied exclusively on foreigners to finance measures against such tourism-related issues as littering and traffic congestion.
On April 24, an expert panel convened by the prefectural government met for the first time to study the fee system. The seven panel members, who include university professors well-versed on the tax system and tourism policies, are tasked with discussing the details of the intended use of the collected fees and the method of collection. The experts are expected to submit a proposal to the prefectural government.
The moves follow a sharp influx of inbound foreign tourism to Japan due to such factors as the yen's significant depreciation. According to the Osaka Convention and Tourism Bureau, an estimated 9.798 million inbound tourists visited the prefecture last year, a recovery to 85% of that in 2019 before the outbreak of the COVID-19 pandemic. The estimated number of inbound tourists to Japan was about 3.08 million in March, topping 3 million in a single month for the first time ever.
At the expert panel meeting, Yoshimura expressed his view that the increase would continue. He also said, "To achieve coexistence and co-prosperity with local residents, we would like to ask foreign tourists to shoulder some of the burden." He stressed, "[A system] will be necessary for Osaka and Tokyo in the future."
Regarding the amount to be collected, Yoshimura mentioned "\100 to \300." A fee of \100 would generate about \980 million in revenue, according to a simple calculation based on data for 2023.
Possible violation of tax treaties
The introduction of the fee system, however, faces various hurdles.
Japan is a party to tax treaties that stipulate the country must not discriminate between nationals of its own nation and those of other nations. Accordingly, the International Tourist Tax, under which the government collects \1,000 as a flat fee from people leaving Japan, applies to both foreign and Japanese nationals. If the envisaged fee system targets foreign visitors only, it might violate this provision.
At the panel's first meeting, Hironori Yamaguchi, a professor of social psychology at Ritsumeikan University, said defining "foreign tourist" is a difficult issue that needs to be addressed. Noting that Japanese nationals who reside outside Osaka Prefecture could be included in the definition of foreign tourist, he said, "We have to carefully consider fairness in collecting [the fees]."
The method of collection is another problematic issue. Like the accommodation tax, under which the prefectural government levies \100 to \300 per night on a guest who stays overnight at such accommodations as hotels and inns, having hotels and inns collect the fees is considered a likely proposal. But this method would increase the burden on businesses, as they would need to input the information into the system, and may prompt backlash.
Not in time for Expo
The timing of the introduction is another point of contention.
Yoshimura initially expressed his intent to introduce the fee system in April 2025, when the Osaka-Kansai Expo is scheduled to open. But when Dimitri Kerkentzes, secretary general of the Bureau International des Expositions (BIE), the Paris-based organization overseeing the Expo, met Yoshimura on April 10, he called on the governor to postpone the introduction to after the Expo, saying that visitors from abroad would feel unwelcome. Yoshimura responded, "We don't intend to force the introduction to coincide with the Expo." The governor thus modified his stance.
It is also necessary to designate time to properly inform all interested parties about the system. A senior prefectural government official said, "It's quite impossible [to introduce the fee system] in time for the Expo."
(May 28, 2024)
(END) Dow Jones Newswires
September 18, 2024 05:12 ET (09:12 GMT)
Copyright (c) 2024 The Yomiuri Shimbun
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