Economic Effects of Tourism Tax Changes in Australia: Empirical Evidence from a Computable General Equilibrium Model

Ranjith Ihalanayake

Tourism Economics, 2012, vol. 18, issue 1, 181-202

Abstract: This paper analyses the economic effects of tourism tax changes in Australia. To this end, a tourism tax model (TTM), a computable general equilibrium (CGE) model of the Australian economy, is developed explicitly incorporating two tourism sectors. This is an important improvement in modelling tourism in a CGE context. The tourism sectors are incorporated using the ‘tourism dummy sector approach’, in which both the demand and supply sides of tourism sectors are modelled adequately to reflect the true nature of tourism. This model is used to carry out simulations of abolishing tourism taxes which are financed by an increase in the GST (goods and services tax). The simulation results suggest that the tourism sector expands as a result of tax abolition, while the other sectors contract. The increase in the GST, on the other hand, leads to an increase in commodity prices and thus the economy suffers, as reflected in a reduction in GDP. Overall, the results show that these tax changes are contractionary, as reflected in real consumption and GDP.

Keywords: tourism taxation; CGE; Australian tourism (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://journals.sagepub.com/doi/10.5367/te.2012.0105 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:18:y:2012:i:1:p:181-202

DOI: 10.5367/te.2012.0105

Access Statistics for this article

More articles in Tourism Economics
Bibliographic data for series maintained by SAGE Publications ().