Boracay, the Philippines, 28 May 2015 \u2013<\/em> Changes in taxes on travel and tourism impact the number of visiting tourists, affecting both jobs and income for local communities.\u00a0 To help guide members, the APEC Tourism Working Group and the World Tourism and Travel Council (WTTC) presented a study assessing the impact of taxation policies on tourism and its contribution to economic growth at a conference last week in Boracay.<\/p>\n With the rapidly growing Asia-Pacific tourism sector, governments are looking to the industry as a possible revenue source. However, tax hikes on hotels, restaurants or air passenger travel bump\u00a0up prices of destinations, causing tourists to shy away. This in turn\u00a0potentially leads to less spending by tourists on tourism-related services\u2014ultimately depressing jobs in local communities.<\/p>\n \u201cProperly constituted taxes are certainly a necessary and legitimate fiscal tool for every economy as they create a level playing field for private enterprises and the tourism sector should naturally contribute to it,\u201d said Javier Guillermo Molina, Chair of the APEC Tourism Working Group.<\/p>\n \u201cThe sector has proven to be resilient and contributed to the recovery of many of our economies. Thus, fiscal policy makers should bear in mind the medium and long term impacts on its authority to create economic growth and development while designing new taxes.\u201d<\/p>\n \u201cFor example, which taxes have a positive or negative effect on the number of tourists who visit and its implications on the wider economy,\u201d added Guillermo.<\/p>\n Using economic modeling to assess the effects of tax rises or cuts on five APEC economies\u2014Chile, Indonesia, Korea, Peru and the Philippines\u2014the study discovered that tax increases will cause visitor demand to fall and eventually will negatively impact GDP and employment. For example, according to the study, a 1% increase in tax leads to an average loss of USD 56.7 million to GDP and an average of 4,030 less jobs in the tourism sector per economy.<\/p>\n \u201cChanges in taxation can have different impacts on the travel and tourism sector.\u00a0 Large, sudden increases in taxation can cause a sharp downturn in demand.\u00a0 Conversely, a generous cut in taxation can draw more visitors to an economy.\u00a0 These indicate the importance of the size of the change in tax rate in projecting its impact,\u201d explained Rolando Canizal, Assistant Secretary of the Philippines\u00a0Department of Tourism, who spearheaded the APEC tourism taxation assessment study.<\/p>\n \u201cMoreover, if the increased government revenue collected from the tax is then used to re-invest in the tourism sector through conservation of tourism cultural sites, construction of basic infrastructure or skills training of tourism workers, this contributes to the long-term growth of the tourism industry,\u201d added Canizal.<\/p>\n The findings of the study were shared with relevant stakeholders at the APEC and WTTC Conference on Tourism and Taxation in Boracay and will form the basis of tourism taxation policies for APEC members moving forward.<\/p>\n","protected":false},"excerpt":{"rendered":"