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The impacts of Australia's departure tax: Tourism versus the economy?

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  • Forsyth, Peter
  • Dwyer, Larry
  • Spurr, Ray
  • Pham, Tien

Abstract

This study estimates the flow and expenditure effects of the recent increase in Australia's Passenger Movement Charge (PMC), as well as the economic impacts on the Australian economy and the tourism industry. After discussing the nature of the PMC, it outlines the types of industry stakeholder concerns as to its effects on tourism both before and after the recent increase. It then presents a framework developed by the authors that can be used to distinguish the effects of the increased PMC on the wider economy and on different tourism markets. A computable general equilibrium model is then used to estimate the economic impacts of the increased charge on different Australian tourism markets – inbound, outbound and domestic. The implications of the modelling results for the validity of the industry criticisms of the PMC are discussed. The results confirm that the tourism industry will suffer, though it also indicates that the Australian economy will gain – thus there is a clash between the industry and wider economic interests. The types of issues addressed in this paper can inform policy making regarding the gainers and losers from departure tax increases in tourism destinations generally.

Suggested Citation

  • Forsyth, Peter & Dwyer, Larry & Spurr, Ray & Pham, Tien, 2014. "The impacts of Australia's departure tax: Tourism versus the economy?," Tourism Management, Elsevier, vol. 40(C), pages 126-136.
    • Handle: RePEc:eee:touman:v:40:y:2014:i:c:p:126-136
    DOI: 10.1016/j.tourman.2013.05.011
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    References listed on IDEAS

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    1. Peter B. Dixon, 2009. "Comments on the Productivity Commission’s Modelling of the Economy‐Wide Effects of Future Automotive Assistance," Economic Papers, The Economic Society of Australia, vol. 28(1), pages 11-18, March.
    2. Forsyth, Peter, 2006. "Martin Kunz Memorial Lecture. Tourism benefits and aviation policy," Journal of Air Transport Management, Elsevier, vol. 12(1), pages 3-13.
    3. Michael Keen & Jon Strand, 2007. "Indirect Taxes on International Aviation," Fiscal Studies, Institute for Fiscal Studies, vol. 28(1), pages 1-41, March.
    4. Larry Dwyer & Peter Forsyth & Ray Spurr & Thiep VanHo, 2003. "Tourism's Contribution to a State Economy: A Multi-Regional General Equilibrium Analysis," Tourism Economics, , vol. 9(4), pages 431-448, December.
    5. Productivity Commission, 2005. "Assistance to Tourism - Exploratory Estimates," Research Papers 0501, Productivity Commission, Government of Australia.
    6. Larry Dwyer & Peter Forsyth & Ray Spurr & Thiep Van Ho, 2006. "Economic Effects of the World Tourism Crisis on Australia," Tourism Economics, , vol. 12(2), pages 171-186, June.
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    8. Nada Kulendran & Sarath Divisekera, 2007. "Measuring the Economic Impact of Australian Tourism Marketing Expenditure," Tourism Economics, , vol. 13(2), pages 261-274, June.
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    Cited by:

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    2. Asensi Descals-Tormo & José-Ramón Ruiz-Tamarit, 2024. "Tourist choice, competitive tourism markets and the effect of a tourist tax on producers revenues," Tourism Economics, , vol. 30(2), pages 283-300, March.
    3. Tien Duc Pham & Son Nghiem & Larry Dwyer, 2018. "The economic impacts of a changing visa fee for Chinese tourists to Australia," Tourism Economics, , vol. 24(1), pages 109-126, February.
    4. Álvarez-Albelo, Carmen D. & Hernández-Martín, Raúl & Padrón-Fumero, Noemi, 2017. "Air passenger duties as strategic tourism taxation," Tourism Management, Elsevier, vol. 60(C), pages 442-453.
    5. Papatheodorou, Andreas, 2021. "A review of research into air transport and tourism," Annals of Tourism Research, Elsevier, vol. 87(C).
    6. Asensi Descals-Tormo & Maria J. Murgui-García & Jose Ramon Ruiz-Tamari, 2023. "A theoretical model-based indirect estimation of the direct and cross price elasticities of demand for tourist goods and services," LIDAM Discussion Papers IRES 2023013, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    7. Borbely, Daniel, 2019. "A case study on Germany’s aviation tax using the synthetic control approach," Transportation Research Part A: Policy and Practice, Elsevier, vol. 126(C), pages 377-395.
    8. Seetaram, Neelu & Song, Haiyan & Ye, Shun & Page, Stephen, 2018. "Estimating willingness to pay air passenger duty," Annals of Tourism Research, Elsevier, vol. 72(C), pages 85-97.

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