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According to the Institute of Economic Studies at the University of Iceland, tourist numbers could drop by 48,000 annually if the hotel tax increase is implemented.
The government argues that the increase is necessary in order to ensure that the industry grows under realistic conditions and not with an advantage over other industries. The tourism industry is currently exempt from the full VAT rate.
Meanwhile, the regional council of Skagarfjörður municipality, North Iceland, voiced its strong opposition to the planned increase in VAT…also, MP for the Independence Party Illugi Gunnarsson said Reykjavik will be the worst affected due to low availability of accommodation in the city.