Tariff and Consumption Tax Reforms in a Developing Tourism Economy

Hamid Beladi, Chi-Chur Chao and Jean-Pierre Laffargue

The Journal of International Trade & Economic Development, 2015, vol. 24, issue 6, 822-834

Abstract: This paper examines the effects of a coordinated tax reform by replacing import tariffs with point-by-point increases in consumption taxes for a small-open developing tourism economy. Foreign tourists demand for the non-traded goods provided in the informal sector of the host economy, resulting in a tourism-induced terms-of-trade effect. The presence of inbound tourism lends a support to positive tariffs even for a small open economy. The indirect tax reform of this kind can increase residents’ welfare and government revenue when the initial tariffs are relatively larger to the consumption taxes.

Date: 2015
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Working Paper: Tariff and Consumption Tax Reforms in a Developing Tourism Economy (2015)
Working Paper: Tariff and Consumption Tax Reforms in a Developing Tourism Economy (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:taf:jitecd:v:24:y:2015:i:6:p:822-834

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DOI: 10.1080/09638199.2014.978356

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