Tourism industry - Essay Example

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According to the report of ‘United Nations World Tourism Organisation’, the tourism industry in developing countries account to 70% of…
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Tourism Industry Introduction Tourism industry is one of the rapidly progressing industries and it is also a major source of employment for many developing countries. According to the report of ‘United Nations World Tourism Organisation’, the tourism industry in developing countries account to 70% of service exports (Corthay and Loeprick, 2010). Tourism has provided many benefits both socially and economically in rural areas and developing countries. Tourism has contributed in various infrastructure developments such as roads and hotels and has helped in creating jobs through both direct and indirect employment (USA Today, 2014). It has also helped in better cultural understanding through the interchange of ideas between host and guest communities. Though mass tourism provides different economic and social benefits, it is also associated with different negative impacts on social, economic as well as environment aspects of a community. Tourism can be sustainable only if it is managed carefully (United Nations Environment Programme, 2014; Mirbabayev, n.d.).
Taking into concern the various impacts of the mass tourism on environment and economy, there has been an idea of imposing taxes on mass tourism in additional to the already high taxes on various tourism requirements such as hotels, flight charges and other rentals. This idea may help in eliminating certain tourism related issues but it fails to realise the impact that it can cause to the tourism industry. In fact, tourism taxes in some countries have become an easy and a trendy fashion for governments to collect revenue from visitors in order to cover the government expenses. The tourism industry is taxed by methods of direct taxation to the tourists or units associated or involved in tourism (Gooroochurn & Sinclair, 2003; Rinaldi, n.d.).
Such hikes in taxes not only force the tourists to go to other cheaper destinations but also have a serious effect on the local residents. For example, the Hawaiian Tourism industry experienced fall in tourism in 2007 owing to effects of various direct along with indirect tax hikes, which affected more than 75% of jobs in the state. The tourist shifted elsewhere taking their spending with them and the taxpayers were left with budget deficit owing to that the state economy was also weakened (Nothdurft, 2009). Similar example can be taken from fact that Caribbean Tourism was impacted negatively due the government aviation taxes in tourism (Caribbean journal, 2013)
Tourism taxes are also being levied in the local level, which is creating more tax burdens for the tourists. The taxation on mass tourism may have a negatively impacted the tourism industry, which is vital for the economic growth of many developing countries and it may result in the reduction of wider economic benefits available through the industry. The tax levied on the tourism is termed as discriminatory and it only leads to affect the tourism industry, which is a key driver in the economic development (Dwyer & Forsyth, 2010; IATA, n.d.).
The revenue collected from tourism taxation though identified to be beneficial for the public in augmenting the necessities of public services but on the other hand, it can also prove deterrent against the welfare of tourism industry. Tourism taxation acts as a source of revenue for both developing as well as developed countries. Thus, it can be comprehended that the idea of imposing tax on tourism would adversely affect the performance of tourism industry to a large extent, due to which the idea of tax on tourism should be disregarded.
Caribbean Journal. (2013). How government aviation taxes negatively impact Caribbean tourism. Retrieved from:
Corthay, L., & Loeprick, J. (2010). In practice business taxation. Taxing Tourism in Developing Countries. 14, 1-8.
Dwyer, L., & Peter F. (2010). Tourism economics and policy. 2012. Channel View Publications.
Gooroochurn, N., & Sinclair, M. T. (2003). The welfare effects of tourism taxation. Retrieved from:
IATA. (n.d.). Tourism tax. Retrieved from:
Mirbabayev, B. (n.d.). The role of tourism in international development. Retrieved from:
Nothdurft, J. (2009). Research & commentary: The damaging effects of tourism taxes. Retrieved from:
Rinaldi, A. (n.d.). Externalities and tourist tax. Retrieved from:
United Nations Environment Programme. (2014). Negative economic impacts of tourism. Retrieved from:
USA Today. (2014). Positive & negative effects of tourism. Retrieved from: Read More
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