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Taxation of tourism activities: evidence from Portugal

Lurdes Varela M.ª

No 3048, EcoMod2011 from EcoMod

Abstract: The paper will discuss whether the increase or introduction of tourism taxation should be addressed through specific or general indirect taxation. With this objective, the paper will describes the concept of tourism taxes and will present different reasons that are in its bases of adoption. The paper also offers some numerical exercises comparing the effects of specific and general tourism taxation in Portugal, a developed country with a sizeable tourism industry. The expected significant effects of tourism taxation in countries where tourist activities represent a major economic sector require the use of modern methodologies to evaluate them, such as CGE models. According several authors these techniques offer important advantages compared to traditional partial equilibrium approaches, since they capture intersectoral and macroeconomic links.The article will try to prove if both specific and general taxes on tourism would be able to yield improvements in terms of revenues and internalization of costs without obstructing the economy.

Keywords: Portugal; Tax policy; General equilibrium modeling (CGE) (search for similar items in EconPapers)
Date: 2011-07-06
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