Tourist tax to promote rentals of low-emission vehicles

Emilio Gómez-Déniz, José Boza-Chirino and Nancy Dávila-Cárdenes
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Emilio Gómez-Déniz: University of Las Palmas de Gran Canaria, Spain
José Boza-Chirino: University of Las Palmas de Gran Canaria, Spain
Nancy Dávila-Cárdenes: University of Las Palmas de Gran Canaria, Spain

Tourism Economics, 2021, vol. 27, issue 7, 1461-1481

Abstract: In the Canary Islands (Spain), the tourism boom has been paralleled by sharp growth in the car rental sector. However, this economic activity is associated with problems such as rising levels of vehicle emissions. In this article, we discuss, on the one hand, the introduction of a tax to internalise the costs of emissions from car rental fleets and, on the other, the measures to reward users who rent environmentally-friendly cars. For this purpose, we propose a model based on statistical decision theory, from which a Bayesian rule is derived. According to this model, the tax increases with the number of days the car is rented but decreases in line with the environmental efficiency of the vehicle. A data sample of visitors to the Canary Islands is used to compare the covariates involved in computing the number of car rental days and the corresponding tax payable.

Keywords: Bayesian; externalities; hire cars; tax; tourism (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:27:y:2021:i:7:p:1461-1481

DOI: 10.1177/1354816620946508

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