The government has begun collecting a ¥1,000 departure tax — the first new permanent tax to be introduced in 27 years — on nearly every passenger, both foreign and Japanese nationals, departing the country.

The revenue from this new tax — estimated to reach ¥50 billion in fiscal 2019 — is to be used solely for promoting inbound tourism, which has been booming in recent years, with the number of inbound tourists topping 30 million for the first time last year.

The government, which hopes to boost the number to 40 million in 2020 and to 60 million in 2030, says the tax will help finance measures to improve services for these foreign travelers.

The creation of a new limited-purpose tax, however, raises concern that the revenue could be wasted on unnecessary or ineffective spending. With the imposition of the new levy, the fiscal 2019 budget for the Japan Tourism Agency has been more than doubled from the previous year. The use of the tax’s revenue must be continually monitored to make sure it’s achieving the intended effect — to better serve the needs of inbound tourists.

The levy is added on to the transportation fares of passengers departing from the nation’s airports and seaports, except for children under the age of 2 and those in transit. Since the amount collected from each passenger is not that large, the new tax does not appear to have met with strong objections so far.

The government says the incoming revenue will be spent mainly for three purposes — developing a comfortable travel environment for inbound tourists, disseminating information about the nation’s tourism attractions and improving visitors’ satisfaction.

As an example of better services for travelers, the government plans to install more automated gates using facial recognition technology at international airports to speed up the immigration process — including for Japanese travelers.

Other measures reportedly under consideration include placing multilingual translation machines at facilities for tourists, providing free Wi-Fi, replacing Japanese-style toilets with Western ones in public lavatories, and so forth.

The fiscal 2019 budget also features measures to promote the development of unique local cultural and natural features as tourism resources in order to encourage inbound tourists — who are still flocking primarily to the big urban areas — to visit rural areas of the country more.

Certain investments will need to be made to make Japan a more attractive destination for tourists from abroad. Efforts to build inbound tourism, which has been expanding rapidly over the past several years, into a key growth industry of the future is important. But whether the new tax is the appropriate means to raise the funds for such investments is another question.

Setting aside the revenue solely for tourism purposes runs the risk of pouring the money into wasteful programs in the name of tourism promotion — despite the government’s overall tight fiscal condition. Even if the revenue is secured, the cost-effectiveness of each program must be scrutinized.

The key point is whether the revenue from the tax is indeed going toward serving the needs of inbound tourists. To make the best use of the tax income, the government should first research and identify what are the biggest inconveniences felt by travelers from abroad, find out what needs to be done to fix them and invite more visitors, and spend the revenue where it’s needed.

Now that the tax has been introduced, how the revenue is used needs to be closely monitored.

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