Business

Hokkaido town of Kutchan in Niseko ski region introduces Japan's first fixed-rate lodging tax

Kyodo

The town of Kutchan, part of the Niseko tourism zone that includes a number of popular ski resorts in Hokkaido, introduced a 2 percent levy on Friday for stays at all lodging facilities in its jurisdiction, marking the first rollout of a proportional accommodation tax system in Japan.

The tax, which also applies to private lodgings, is expected to bring in revenue of up to ¥300 million ($2.76 million) per year for the town. Authorities plan to use the funds to better accommodate the increasing number of foreign visitors flocking to the area, with measures that would include training multilingual staff and improving the public transport system.

According to the Internal Affairs and Communications Ministry, Kutchan is the fifth government to introduce an accommodation tax, following Tokyo, Osaka Prefecture and the cities of Kyoto and Kanazawa. Fukuoka Prefecture and two of its cities, Kitakyushu and Fukuoka, have also enacted ordinances for an accommodation tax. However, in all of these locations the levy has been set at a fixed amount irrespective of the price of accommodation.

Under Kutchan’s lodging tax, guests will be charged 2 percent of the total cost of their stay excluding meals. The tax will be collected at accommodation facilities on behalf of the local government, Kutchan officials said.

Around 530 accommodation facilities operate in the town, which housed a total 460,000 guests in fiscal 2018.

Results of an annual survey released by the Land, Infrastructure, Transport and Tourism Ministry in September showed that Kutchan had logged the highest price increases for commercial and residential properties in the country, both up 66.7 percent from a year earlier as of July 1.

With foreigners continuing to purchase vacation homes in the town, the area also included locations that saw the second- and third-highest increases in their residential land prices.

The Hokkaido Prefectural Government, along with other local governments such as Sapporo, Hakodate and Niseko, are also considering introducing an accommodation tax. However, doing so at both administrative levels would raise the issue of double taxation, similar to the situation seen in Fukuoka Prefecture.

“We need to carefully make adjustments after showing specifically what we envision with the introduction (of the tax),” said Hokkaido Gov. Naomichi Suzuki at a regular news conference Thursday. “We aim to have an outline of our set direction by the end of the year.”