Nova workboard

a blog from young economists at Nova SBE

Is Lisbon the new Amsterdam?

What do cities such as Venice, Rome, Barcelona and Amsterdam have in common besides remarkable landmarks and rich history? Protests. More specifically, protests about the number of tourists pouring in these cities at an increasing rate. Venice’s situation with mass tourism has gotten so bad that the city might end up in the “world heritage sites in danger” list by UNESCO. Amsterdam, in 2016, was visited by 17 million people in a city with 850.000 people living in it. The local council has decided to raise taxes on several different types of accommodation for tourists. It plans to introduce a fixed amount, per night, up until 10 euros adding to the already fixed 5% tax on the cost of accommodation. The goal, according to Udo Kock, is to reduce tourists with a lower purchasing power and diminish stag weekends.

Tourism brings significant economic benefits with the creation of jobs in the sector and others related (Retail for instance) which will increase demand for goods and services in other sectors creating even more jobs thus having the famous “multiplier effect”. Furthermore, it will increase corporate revenues and household income which can be taxed. The money received from these taxes can be used to renew historical sites or invest in ads in order to promote even more tourism, thus, restarting the cycle. Despite all the benefits, it also has its downsides. Some social issues arise, for instance, large crowds and long queues on transports or restaurants. As the number of visitors increases, so does the costs of cities with policing and cleaning services for instance. Moreover, rent prices can become unaffordable for the locals which might drive them out of the city center to the periphery.

This last argument of rise in rent prices was a hot topic during the last council elections in Portugal. Tourism in Lisbon and Oporto was discussed on several debates among the candidates. Portugal has been breaking records, every year, in terms of visitors in the country. Low fare airlines and cheaper lodging options (such as Airbnb) have been “promoting” more and more travelling and the trend is to rise in the upcoming years.

Nowadays, Lisbon has a council tax of 1 euro per night (per person) up until 7 days which compared to other major european cities is somewhat low. Given the astonishing growth of Lisbon in terms of tourists, is the fate of Lisbon the same as Amsterdam’s? What can possibly be done to prevent the negative impact of tourism and ease some feelings of the locals and, at the same time, not kill the sector which has a great impact in the portuguese economy?

A regressive tax on the quality of the accommodation might be one possible solution. This would reduce the number of lower purchasing power tourists and increase “high end tourism”. This could increase revenues from spending and, the same time, decrease some crowds and long queues.

Moreover, “harsher” regulation on suppliers of short-term housing by reducing the length of stay.

 

Miguel Alves Castro

 

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Author: studentnovasbe

Master student in Nova Sbe

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