search query: @indexterm taxation / total: 1872
reference: 201 / 1872
| Author: | Hämäläinen, S. |
| Title: | Optimal commodity taxes with tourist demand |
| Journal: | Baltic journal of economics
2004 : SPRING-SUMMER, VOL 4:2, p. 25-38 |
| Index terms: | Taxation Policy Tourism Models |
| Language: | eng |
| Abstract: | The existence of country-specific commodities that have to be bought and consumed locally plays an essential role in tourism (hereafter as: trsm.). This paper discusses how optimal taxation rules are modified when the taxable goods include goods demanded by tourists (here as: trts.). The main point is that tax rates can be manipulated to shift some of the tax burden from domestic residents onto trts. There is indeed a reason why an optimum taxation approach is useful for trsm., as the goods are consumed inside the host country, and discrimination is difficult. The paper combines several scenarios where trsm. may be relevant for optimal tax policy. Trts. are assumed to trade at the same prices as domestic consumers, but to have zero welfare weight. Thus, the government must balance the desire to tax trts. with the deadweight loss suffered by its own residents. The government should raise some taxes, when trsm. begins. Trsm.-oriented goods with low price elasticities should bear the highest taxes. However, trsm.-related pollution cannot be taxed at prohibitive rates or tourist revenue would be lost altogether. Possible extensions are introduced, for example competition among destination countries. |
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