The impact of taxes on the competitiveness of European tourism
Final report - Study
Tourism is an important economic sector bringing a very substantial contribution to the EU economy. Achieving growth in this increasingly competitive international market requires a supportive regulatory environment, and taxation is a core component of this. While on the one hand taxes directly impact the margins made by businesses and the prices faced by tourists, on the other hand they are an important source of government revenue, which in turn is used to finance infrastructure and support to the tourism sector. This study’s objective is to review the current tourism-related tax structures... in place at a national level in the EU-28 countries. This includes compiling a database of the current tourism-related taxes at the national level in the EU and an analysis of the effects of tourism taxes on the competitiveness of tourism enterprises. The study’s empirical evidence suggests a strong case for reduced taxes on tourists in order to improve the competitiveness of tourist destinations and support the local tourism sector. However, given the need to raise revenue on the one hand and the need to maintain competitiveness on the other, policy makers need to carefully design the tax system so as to balance these conflicting objectives.