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Bill would cut Costa Rica hotel tax, add $15 to airfare

September 12, 2008

Frugal travelers might be happy to hear that the 3 percent hotel tax in Costa Rica could soon be a thing of the past.

The bad news is that the lost revenue to the government would be made up in the form of a $15 fee on all airfares to Costa Rica, according to a bill recently presented to the floor of the Legislative Assembly.

In a week, spending $15 a night at hostels, budget travelers pay about $3.15 in taxes.

The point of the legislation, says Maureen Ballestero, a legislator from the majority National Liberation Party (PLN) and president of the commission that drafted the bill, is to increase funding to the Costa Rican Tourism Board (ICT).

Money from the 3 percent tax is sent to the ICT for tourism promotion, marketing and planning.

However, with more and more visitors to Costa Rica staying in condos and vacation homes, and therefore not paying the hotel tax, legislators felt it was time to update the system, Ballestero said.

The legislator also said some hotels avoid charging their guests the tax by not properly registering them.

“There are more hotels, more visitors, but the income (from the 3 percent tax) has pretty much stayed the same,” she said.

The numbers, however, do not appear to support Ballestero´s claim, as hotel tax revenues seem to be tracking visitation.

In 2006, ICT received about $7.9 million from the hotel tax, an increase of about 19.7 over 2005´s hotel tax revenues of $6.6 million.

Visitation during that same period was flat, with about 1.8 million visitors coming to Costa Rica in 2006, up slightly from the 1.7 million measured in 2005.

In recent months, tourism growth has slowed over last year.

Meanwhile, Panama, which has been challenging Costa Rica´s throne as the premier Central American destination, tourist arrivals increased by 24 percent in the first six months.

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