TOKYO: An increasing number of local governments are introducing an accommodation tax on overnight guests at hotels and other facilities, with the total expected to reach 55 within this fiscal year, according to Japan’s Internal Affairs and Communications Ministry.
Forty-five local governments have already implemented the levy, with another 10 planning to follow suit by the end of the fiscal year, it said.
Some local governments are moving to introduce or raise the accommodation tax to secure financial resources for handling the influx of foreign tourists and promoting tourism. However, concerns have been raised over a potential decline in the number of guests, along with challenges regarding the scope of taxation.
Yugawara, Kanagawa Prefecture, a hot spring resort that sees about 600,000 overnight guests annually, became the first municipality in the prefecture to introduce this kind of tax in April.
Guests are charged a tax of 300 yen (US$1.89) per night for rooms with rates of under 50,000 yen, and a tax of 500 yen per night for rates of 50,000 yen or higher. Children of elementary school age and younger are exempted from the levy.
Yugawara expects this to generate tax revenue of 186 million yen for the current fiscal year, which will be used for issuing accommodation and shopping vouchers usable within the town.
“With our population and tax revenues projected to decline, securing financial resources for tourism is essential to sustain ourselves as a tourism-oriented town,” said Tomonori Suzuki, head of Yugawara’s regional policy division.
The Tokyo metropolitan government introduced the nation’s first accommodation tax in 2002. Since 2017, the tax has spread to other local governments along with an increase in foreign tourists.
As of June 1, the tax had been introduced in seven prefectures including Tokyo, plus 38 municipalities. One more prefecture and nine more municipalities will start levying it by the end of this fiscal year.
The revenues are earmarked for accommodating travelers as well as developing and enhancing tourism resources.
Amid a broader movement to review tax structures, the Kyoto municipal government raised its accommodation tax in March as a measure to combat overtourism.
The city expanded its room-rate brackets from three levels to five, increasing the maximum levy per person per night from 1,000 yen to 10,000 yen for luxury stays of 100,000 yen or more.
The city now expects revenue from the tax for the current fiscal year to more than double to 13.2 billion yen.
The Tokyo metropolitan government plans to switch in fiscal 2027 from its current flat-rate system of 100 yen or 200 yen per person per night to a fixed-rate system charging 3 per cent of the room rate.
While tax revenue is projected to more than double to 19 billion yen under the new system, some hotel industry officials are raising concerns that the increased burden on guests may drive down accommodation usage.
Although the tax is spreading across the country, some local governments have backed down, including the Akita city government, which shelved its plan in March 2025.
The decision followed a survey of local accommodation operators that revealed deep concerns over a potential decline in guests and the administrative burden of collection, and the city also cited its inability to finalize specific uses for the revenue in promoting tourism.
For municipalities considering introducing the tax, determining exactly who and what should be taxed is proving to be a complex challenge.
The Biei town government in Hokkaido had initially sought to exempt residents from both its proposed accommodation tax and a planned parking fee tax at the popular Blue Pond tourist spot.
However, the town was forced to reconsider the plan after the Internal Affairs and Communications Ministry pointed out in October 2025 that there were doubts from the perspective of tax fairness.
“There is a fundamental flaw in the rigid stance that a tax is not fair unless its use is restricted and residents are included in the pool,” said Muneaki Aoki, a professor at Kanagawa University.
“The central government should respond flexibly according to local circumstances.” - The Japan News/ANN
