Icelandic plans for a resource fee on tourism will help bring the industry under control and safeguard the country’s nature while the government is shifting its focus to industries creating higher value, according to the nation’s prime minister.
The hospitality industry has become the engine of Atlantic island’s economy after the collapse of its banks in 2008 which caused a recession and triggered a bailout by the International Monetary Fund. After an abrupt halt caused by the pandemic, the growth in tourism has resumed, with negative impacts becoming more apparent. There are concerns of overtourism and that the industry is straining the country’s roads, health care and housing market.
“We know that the people who come here don’t want to be in a crowded situation,” Prime Minister Kristrun Frostadottir said in an interview in Reykjavik. “They want to experience something pure so we need to maybe just tone it down a bit.”
The island of just 367,000 inhabitants lacks infrastructure to cater to more than two million travellers arriving each year.
Her cabinet that took over after snap elections last November vowed to impose a resource fee on tourism and is still working on the details of the plan.
It also pledged to curb short-term rentals such as online travel services provider Airbnb to favour residential homes in a bid to tackle housing shortages.
“Everyone that has travelled around Iceland knows that the roads are not strong enough,” the 36-year-old said.
Infrastructure is lacking on the most popular destinations, she added.
Her government is working on a policy that would favour high-productivity businesses such as the data centre sector over low-wage service industries, in line with pledges to ramp up green energy production. “We are also a welfare economy with a high GDP per capita which means that people want high-paying jobs here,” she said.
