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ETOA protests 'retrospective taxation' in Italy

David Browne, ETOA Briefing  Feb 05, 2009

The European Tour Operators Association (ETOA) is writing to the government of Italy to protest against the sudden increase in charges to bring coaches in to popular destinations in Italy.

From January of this year, tour operators have been subjected to dramatically increased charges in cities such as Florence, Venice and Pisa.

“What is particularly distressing is that these charges are being introduced with no notice,” said Tom Jenkins, executive director, ETOA. “Visitors book their journey many months in advance. Tour operators have to price them years ahead. You cannot “re-price” a product that has already been sold. Such a sudden surcharge has to be absorbed from the margin.

This looks extremely bad for Italy and for Europe. It punishes enterprises for bringing visitors: it is a fine on inward investment. It suppresses demand for the most environmentally efficient form of transport. It also betrays an attitude where taking money off visitors is considered a victimless crime. In this year, of all years, everyone is striving to cut costs in order to boost demand. But not in regional Italy.”

Many of Italy's cities have imposed traffic restrictions and enclosed their historic centers in a ZTL – a zone of traffic limitation. The original aim was to reduce congestion and pollution from vehicle fumes. In some cities such as Venice and Florence the area of limitation is quite wide – much more than a pedestrian-only area of streets, and the ZTL scheme is used to inflate the cost of parking cars and coaches closest to the city centers.

"We were advised only on January 5th that we had to pay the new ZTL charge for all tours staying over in Florence and this was applicable from Jan 1st, then on Jan 20th we were advised that there was an increase on visits to Pisa and from Feb 1st, that we will have an increase for the Venice ZTL," said Angela Callaghan of ANA Sales Europe, specialists in bringing customers into Europe from Japan.

"Japanese law does not allow us to charge our clients any additional supplements. It is not acceptable for any city to ask for a ZTL tax when we overnight in that city. The worst thing is that we have to absorb all of the costs."

The cost for a coach to enter the ZTL area in Venice, for example, ranges from €180 to €350 depending on the season. The lowest rate is for Euro IV coaches, fitted with reduced exhaust emission systems, with the aim of encouraging coach fleets to replace older vehicles with more environmentally-friendly models. Coach operators point out that it will take years to convert all fleets to the new emissions standard, but the increase in charges applies immediately, putting up the cost of a holiday in Italy.

In Florence access fees for coaches range from €120 to €230. The scale is complicated because different charges are made for classes of visitors.

By way of contrast, the charge to park a coach in York is £11 all day in the summer season April-October and £8 the rest of the year. In Stratford-on-Avon a coach can stay for 4 hours in an area very close to the town centre for a fee of £4.20 or park there for 24 hours for £7.40.

In Barcelona, coaches are charged €5 per hour daytime and €40 for a 24-hour stay in city centre bus parks. In Paris, a 24-hour Auto-Car pass allows a coach to park in a bay on a city centre street or in a bus park and a 24-hour permit costs only €50. This is less than half the lowest rate charged in Florence.

EF Tours, a specialist in educational visits for young people, has protested to the authorities in Florence about the abolition of the student rate on ZTL. "We were amazed to find that in this year of crisis for tourism and all other sectors, the costs have doubled for educational tourism, where clients’ resources are limited.”

One of the main complaints of the coach tour operators is that the costs of taking a tour by coach multiplies when a trip takes holiday-makers to several tourist hot spots on a tour. A typical Italian tour would include visits to Pisa, Florence and Venice, each in turn charging high access and parking fees for coaches.

And there was no assurance that the revenues from high charges for coach parking were earmarked for environmental improvement or better tourism services in any of the cities involved. The fees are regarded simply as a tax on tourists, who unlike residents make little drain on public services but, by contrast, boost the local economy through their spending in restaurants, hotels and shops and at galleries and other attractions.

There is also concern that the high parking fees for coaches discriminate against passengers who arrive by coach, as they are not matched by taxes on tourists who arrive by train, private or rented car or cruise ship. Parking places for coaches, even if they pay to enter the ZTL zones in Italian cities, are still a considerable walking distance from key attractions, museums and other popular tourist sites. It can mean a walk of over a mile, and little consideration is given by the Italian city authorities for people of limited mobility.

The ETOA protest about the high cost of coach access is supported by ECTAA, the association of travel agents in the EU. "Tourism is perceived as a profitable business and thus lends itself well to generating additional tax income. However, often new taxes and tax increases or other charges are applied with very little regard to other levies being applied on other tourism services. The end result is that a European visitor cannot make a move without paying money for some tax, fee or charge," said ECTAA vice president, Jan Van Steen.

The controversy was raised at a coach operators' conference last month in Wolfsburg, Germany. Germany is by far the biggest market for tourism to Italy – at just short of 30 per cent of the bed-nights spent by visitors in Italy in 2006, with the UK second at eight per cent and the USA 7.7 percent. Richard Eberhardt, president of the trade association RDA, said many destinations and coach operators were losing out because of excessive parking fees, unsuitable and inconvenient coach parking facilities and the introduction of restrictions on coaches supposedly for environmental reasons.

He said coach tours, city breaks and day excursions were a significant and essential source of business for holiday operators. The RDA was active in trying to persuade cities and politicians to make practical regulations for coach tourism in the interests of economic development and employment growth.

Under Italian law the authority to charge fees and impose local taxes rests with the mayor and local council. The national government can put pressure on cities like Venice and Florence to have regard to national concerns such as a downturn in tourist arrivals, the implications for regional development and employment in Italy as a whole. High costs for access lead to higher prices for passengers and add to the strain on making Italy attractive when there is competition elsewhere.

A recent survey by the Confederation of Passenger Transport (CPT) showed that many people in the UK were becoming very choosy about where to go for their holidays – with a close eye on the total price of a trip. The survey in January revealed that most respondents were unwilling to give up their annual summer holiday, but would be spending less and a coach tour was perceived as a cost effective means of travelling. The coach-touring sector is price-sensitive and a hike in parking costs, reflected in higher prices for trips could mean some places lose out on the coach tour market.

"Even in the current financial climate there is still a hunger for holidaying, although people are thinking a bit more carefully about where they go and how they get there," said Simon Posner, CPT chief executive. "Every year more than 273 million tourist and leisure trips are made by coach which proves the industry is big business for UK tourism and transport economy. However, many places will miss out on this economic boost because of inadequate provision for coaches in their regions."

Kurt Janson, policy director at the Tourism Alliance, said there was often a failure to recognize the broad benefits that coach transport can bring to a community. "More cost effective travel options like the coach provide a lifeline to tourism and leisure facilities for many but towns, cities and resorts need to look at how they welcome coaches and with them, millions of tourists, if they are going to reap the rewards they provide," he said.

ETOA protests 'retrospective taxation' in Italy

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