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Taxing Tourism in Spain: Results and Recommendations

Alberto Gago, Xavier Labandeira (), Fidel Picos () and Miguel Rodriguez ()
Authors registered in the RePEc Author Service: Alberto Gago Rodríguez

No 16, DEA Working Papers from Universitat de les Illes Balears, Departament d'Economía Aplicada

Abstract: This paper analyses the foundations, possible applications and the effects of tourism taxation in Spain. The article begins with an analysis of the economic and environmental reasons for taxing tourism, which would seem to call for taxes based on the principle of benefit, for either revenue or corrective purposes. Subsequently, we describe the praxis of tourism taxation in Spain, with special mention being given to the now repealed Balearic ecotasa. Finally, the effects of two fiscal modifications with revenue or corrective objectives are studied through the use of an applied general equilibrium model developed for the Spanish economy. We thus see that a 10% tax on lodging brings in significant public receipts, increases social welfare and has no effect on the environment. On the other hand, an increase of VAT rates on tourism-related sectors could have the same effects on tourist expenditure but at the costs of greater impact for Spain’s economy.

Keywords: Tourism demand; frequency of travel; habit persistence; household data. (search for similar items in EconPapers)
JEL-codes: C25 D12 (search for similar items in EconPapers)
Date: 2006-03
New Economics Papers: this item is included in nep-pbe and nep-tur
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

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Working Paper: Taxing Tourism in Spain: Results and Recommendations (2006) Downloads
Working Paper: Taxing Tourism in Spain: Results and Recommendations (2006) Downloads
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