3 days ago
Japan's tourism hot spot Hakone to introduce lodging tax in 2028 to boost infrastructure
ODAWARA, Kanagawa -- The mayor of Hakone in Kanagawa Prefecture announced on June 10 that the popular hot spring resort town intends to introduce a lodging tax in April 2028.
While tourism is the area's core industry, the burden of overtourism is straining municipal finances. Hakone is considering implementing the lodging tax not as a "special purpose tax" whose usage is limited to tourism measures, but a "general tax" that can be used for broader purposes, which would be unprecedented in Japan.
Hakone Mayor Hiroyuki Katsumata announced the move at a regular town assembly meeting on June 10. He explained the reason for the introduction, stating, "It is essential to promote policies that will enable residents and businesses to live and work with peace of mind, and ensure that tourists are satisfied with their visit, no matter how many times they come."
Hakone has a population of about 11,000. In 2024, the number of tourists exceeded 20 million for the first time in six years, with 3.98 million staying overnight. The town has more than 500 inns and hotels, and the number of private lodging facilities is also increasing.
Although Hakone has the highest revenue from bathing taxes in Japan, it faces a heavy financial burden from tourist-related expenses such as garbage and sewage disposal, firefighting and emergency medical services, which are not covered by tourism measures. Without action, the town is expected to have expenditures exceeding revenue by about 1 billion yen (roughly $6.96 million) in fiscal 2029.
In 2019, Hakone established an expert panel to discuss funding for sustainable tourism community development and maintenance. It has held 13 rounds of discussions on measures to collect "tourism community development funds" from tourists, which will be used not only for tourism policies but also for the maintenance of social infrastructure.
The panel considered options such as raising the bathing tax, but submitted an interim report to the municipal government in May this year suggesting that "the introduction of a lodging tax is the most appropriate solution." It estimates the new tax would generate an additional 590 million to 1.33 billion yen (about $4.11 million to $9.26 million) in annual revenue, and plans to maintain the bathing tax as well.
According to the Ministry of Internal Affairs and Communications, as of April 21, lodging taxes have been introduced in Tokyo and the prefectures of Osaka and Fukuoka, as well as seven cities and two towns in Japan. Another two prefectures, nine cities and one village plan to introduce such a tax by April 1, 2026. However, all existing lodging taxes are special purpose taxes, with revenue restricted to covering tourism-related spending.
In contrast, Hakone is considering introducing the lodging tax as a general tax, which would become part of the town's general revenue. When a municipality seeks to introduce a tax not specified in the Local Tax Act, it must consult and obtain consent from the internal affairs minister. Regarding the possibility of the lodging tax being introduced as a general tax, a ministry official said, "Since discussions begin after the ordinance is passed, we cannot comment at this time."
