On October 17th, the Miyagi Prefectural Assembly passed and enacted a new prefectural ordinance by majority vote, which will impose an “accommodation tax” on guests staying at hotels and inns in Miyagi Prefecture. This new policy aims to revitalize the local tourism industry and improve the environment for receiving Japanese tourists. If approved by the Minister of Internal Affairs and Communications, the policy will be implemented in November next year, coinciding with Sendai City. According to the Ministry of Internal Affairs and Communications, if successfully introduced, this will be the first case of implementing an accommodation tax in the Tohoku region.

Under the newly enacted ordinance, Miyagi Prefecture will levy a 300 yen accommodation tax per person per night on guests staying at accommodations costing 6,000 yen or more throughout the prefecture. In Sendai City, the collection method is slightly different. Sendai City will collect a 300 yen accommodation tax from each guest, of which 100 yen will be allocated to the prefecture and 200 yen to the city. This model of tax revenue sharing between prefecture and city is uncommon in Japan.

Miyagi Prefecture and Sendai City estimate that after implementing the accommodation tax, annual tax revenue will be approximately 1.1 billion yen and 1 billion yen, respectively. This considerable income will be used to further develop and improve local tourism infrastructure and service quality, thereby attracting more tourists and enhancing the tourism experience.

To accommodate the interests of specific groups, the new policy exempts certain types of accommodation activities from the tax. Specifically, school trips, school club activities, and activities of day-care centers and certified children’s centers within and outside the prefecture are exempt from the accommodation tax. This measure demonstrates policymakers’ consideration for education and child welfare.

According to data from the Ministry of Internal Affairs and Communications, nine cities across Japan have already implemented accommodation taxes, including major tourist cities such as Tokyo, Osaka, Kyoto, and Kanazawa. The experiences of these cities may have provided valuable references for Miyagi Prefecture and Sendai City. Notably, among these regions that have implemented accommodation taxes, Fukuoka Prefecture, Fukuoka City, and Kitakyushu City have adopted a tax revenue distribution system similar to that of Miyagi Prefecture and Sendai City. If Miyagi Prefecture and Sendai City successfully introduce this policy, it will become the second case in Japan to adopt a prefecture-city tax revenue distribution model.

The decision of Miyagi Prefecture and Sendai City to jointly introduce an accommodation tax reflects the efforts of local governments to promote coordinated regional development. By unifying collection standards and sharing tax revenue, potential negative impacts from policy differences between regions can be avoided, while also facilitating optimal resource allocation.

The introduction of the accommodation tax may have multiple effects on the local tourism industry. On one hand, the increased tax revenue can be used to improve tourism infrastructure and services, enhancing the attractiveness of tourist destinations. On the other hand, the increased accommodation costs may affect the choices of price-sensitive tourists. Therefore, balancing increased tax revenue and tourism competitiveness will be an issue that local governments need to carefully consider.

Overall, the decision of Miyagi Prefecture and Sendai City to introduce an accommodation tax reflects the trend of Japanese local governments seeking new sources of revenue to support tourism development. As this policy is implemented, its effects and impacts will be worth watching and evaluating.

Key points:

• The Miyagi Prefectural Assembly passed an ordinance to levy an accommodation tax on hotel and inn guests.
• If approved by the Minister of Internal Affairs and Communications, the new policy will be implemented in November next year, coinciding with Sendai City.
• Miyagi Prefecture will levy 300 yen per person for accommodations costing 6,000 yen or more; Sendai City will collect 300 yen, with 100 yen going to the prefecture and 200 yen to the city.
• Miyagi Prefecture and Sendai City expect annual tax revenues of approximately 1.1 billion yen and 1 billion yen, respectively.
• School trips, school club activities, and certain child-related activities are exempt from the accommodation tax.
• Nine cities in Japan have already implemented accommodation taxes, with Miyagi being the first case in the Tohoku region.
• Miyagi Prefecture and Sendai City will become the second case after Fukuoka to adopt a prefecture-city tax revenue distribution model.