Congestion Externalities of Tourism, Dutch Disease and Optimal Taxation: Macroeconomic Implications

NCUIR > School of Management at National Central University > Department of Economics > journal & Dissertation > Item 987654321/51792

Please use this identifier to cite or link to this item: http://ir.lib.ncu.edu.tw/handle/987654321/51792

Title:	Congestion Externalities of Tourism, Dutch Disease and Optimal Taxation: Macroeconomic Implications
Authors:	Chang,JJ;Lu,LJ;Hu,SW
Contributors:	經濟學系
Keywords:	SMALL OPEN-ECONOMY;BOOMING SECTOR;WELFARE;GROWTH
Date:	2011
Issue Date:	2012-03-27 19:06:18 (UTC+8)
Publisher:	國立中央大學
Abstract:	This article develops a dynamic optimising macro model that sheds light on two tourism stylised facts, namely, (i) the congestion externalities caused by tourism expansion and (ii) the wealth effect generated by the revenues from overseas tourism taxation. Based on the two salient characteristics, our positive analysis indicates that if tourism tax revenues are used to provide rebates to local residents, because of the wealth effect, Dutch disease cannot be cured by the consumption tax on tourists. In contrast, if tourism tax revenues are used to provide productive government services for the manufacturing sector, Dutch disease can be treated effectively by taxation tailored for tourism. In a normative analysis, we show that to simultaneously correct the distortion caused by the congestion externality of tourism and generate the revenues from overseas tourism taxation, a government should not only levy a general tax on tourism consumption, but it should also discriminate between domestic and overseas tourism consumption, so that a positive tax surcharge is imposed on foreign tourists. In addition, the key factors that govern the optimal rates of a general tax and tax surcharge are also examined in this article.
Relation:	ECONOMIC RECORD
Appears in Collections:	[Department of Economics] journal & Dissertation

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