Presentation on the impact of city taxes by Valentin Kissmann

Municipalities in Germany are allowed to levy individual accommodation taxes on overnight stays. In a joint project with Sebastian Blesse (Leipzig University) and Jan Kemper (ZEW Mannheim), Valentin Kissmann is examining the effects of such taxes on the local economy. Kissmann presented preliminary findings of the study on 10 December 2025 as part of the seminar series “Specific Features of the Economy in Rural Areas.”

The results show that around 60 cities introduced a tax on overnight stays between 2005 and 2024 in Germany. In a systematic comparison with cities that did not introduce such a tax, the authors use a difference-in-differences framework to identify a moderate decline in the number of overnight stays in the first two years after the tax is implemented. The authors also show that this effect can be explained by a short-term increase in room prices and is particularly pronounced in smaller cities. In the long term, however, city taxes do not show significant effects on the tourism sector.

Valentin Kissmann also discussed the implications of his research and particular, whether these results suggest that hotel taxes can serve as a meaningful source of municipal revenue. Together with the seminar participants, he discussed which factors play a decisive role, highlighting in particular factors like the price elasticity of demand for overnight stays, potential efficiency gains in the industry, and how the tax revenues are used by the municipalities.