More Japanese local governments introducing hotel tax despite some concerns in the industry

A growing trend sees Japanese local governments implementing accommodation taxes on overnight stays, aiming to secure vital financial resources. The Ministry of Internal Affairs and Communications reports that 45 municipalities have already introduced the levy, and an additional 10 are set to follow by the end of the fiscal year, projecting a total of 55 such taxes nationwide.

These taxes are often introduced or increased to manage the surge in foreign tourists and to promote local tourism development. Yugawara, a popular hot spring resort in Kanagawa Prefecture, began levying a tax in April. Guests pay 300 yen per night for rooms under 50,000 yen and 500 yen for rooms 50,000 yen or higher, with exemptions for young children. Yugawara anticipates generating 186 million yen this fiscal year, earmarked for accommodation and shopping vouchers.

"With our population and tax revenues projected to decline, securing financial resources for tourism is essential to sustain ourselves as a tourism-oriented town," stated Tomonori Suzuki, head of Yugawara’s regional policy division. The Tokyo metropolitan government, which introduced the nation's first accommodation tax in 2002, plans to shift to a percentage-based system in fiscal 2027, charging 3 percent of the room rate, expecting revenue to more than double to 19 billion yen.

However, the expansion of these taxes is not without its critics. Some in the hotel industry express concerns that the increased financial burden on travelers could deter visitors. Kyoto, for example, raised its maximum nightly levy to 10,000 yen for luxury stays, expecting its tax revenue to more than double to 13.2 billion yen. The debate continues over balancing the need for tourism funding with potential impacts on the hospitality sector.

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With our population and tax revenues projected to decline, securing financial resources for tourism is essential to sustain ourselves as a tourism-oriented town.