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Willingness to Pay for Tourist Tax in Destinations: Empirical Evidence from Istanbul

Gurel Cetin (), Zaid Alrawadieh (), Mithat Zeki Dincer (), Fusun Istanbullu Dincer () and Dimitri Ioannides ()
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Gurel Cetin: Department of Tourism Management, Faculty of Economics, Istanbul University, Istanbul 34452, Turkey
Zaid Alrawadieh: Institute of Social Sciences, Istanbul University, Istanbul 34452, Turkey
Mithat Zeki Dincer: Faculty of Economics & Vocational School of Social Sciences, Istanbul University, Istanbul 34452, Turkey
Fusun Istanbullu Dincer: Department of Tourism Management, Faculty of Economics, Istanbul University, Istanbul 34452, Turkey
Dimitri Ioannides: Department of Tourism and Human Geography, Mid-Sweden University, Östersund 831 25, Sweden

Economies, 2017, vol. 5, issue 2, 1-15

Abstract: Revenue generated from tourism taxes constitutes an important financial resource for local governments and tourism authorities to both ensure tourism sustainability and enhance the quality of tourist experiences. In order for tourism policy makers to create an efficient and fair tax system in tourism destinations, it is crucial to understand travelers’ perceptions concerning willingness to pay (WTP), tax rates, and their optimal allocation. The objectives of this paper, therefore, are to evaluate tourism taxes as a compensation tool to cover the costs of tourism and to measure tourists’ WTP. The paper also suggests a fair allocation of tax revenues based on tourists’ perceptions. A qualitative approach was used and data were collected through semi-structured in-depth interviews with international travelers to Istanbul, Turkey. The findings suggest that tourists are more likely to pay an additional amount of tax when this is earmarked for improvements in their experiences, but they are reluctant to take on liability concerning matters relating to destination sustainability. Based on the travelers’ perceptions, the paper also identified areas that need investment to improve tourist experiences. An interesting highlight of this paper is that the majority of surveyed respondents reported that their travel decisions would not be negatively affected even if the total cost of their vacation increased by one third. The findings are expected to offer fresh and much-needed insights into tourist taxation for tourism policy makers and stakeholders.

Keywords: tourism taxation; tax system; tourism sustainability; tourism demand; externalities; price elasticity; destination management; Istanbul (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2017
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