Taxing tourism in developing countries

tiorlrE De;e/o~ment, Vol. 20, No. 8, pp. 1145-I 158, 1992. Printed in Greit Britain.

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0305-750X/92 $5.00 + 0.00 1992 Pergamon Press Ltd

Taxing Tourism in Developing Countries RICHARD M. BIRD* University of Toronto industry in many developing countries, where tax little attention has been paid to the taxation of the tourist industry. This paper argues that in principle there is a strong economic case in many, but not all, countries for taxing tourism more than at present, but that the nature of the industry and administrative difficulties severely limit what can be done in practice. This analysis and a review of the fiscal instruments available to most developing countries suggest three main conclusions: first, more attention should be paid to introducing adequate “charging” policies where possible: second, special taxes on hotel accommodation are generally the key to tourist taxation; and third, there is little reason to provide special incentives for investment in the tourist industry. Summary.

-Although

tourism

is an important

revenues are often in short supply, surprisingly

1. INTRODUCTION Although tourism is an important industry in many developing countries, where tax revenues are often in short supply, surprisingly little attention has been paid to the taxation of the tourist industry. Although the brief overview in the next section of the size and nature of the tourist sector in developing countries suggests some reasons for this neglect, it also makes clear the importance of rectifying it. Section 3 of the paper then considers the economic aspects of taxing tourism. This analysis demonstrates that, while designing an optima1 policy for taxing tourism in any particular country is far from easy, since it inevitably depends on many local factors, some important simple principles of genera1 applicability can be derived. As the review in section 4 of the fiscal instruments actually used in a number of countries demonstrates, however, it is difficult to find good “tax handles” in the tourist sector. Finally, section 5 draws together the principal lessons that emerge from the paper.

2. THE IMPORTANCE

OF TOURISM

Tourism is an important industry in many developing countries, often providing both substantial employment and a significant contribution to foreign exchange earnings. In the terms popularized by Bryden (1973), a “tourist country” is one in which tourism accounts for more than 10% of foreign exchange earnings or over 5% of GDP. In 1984, at least 16 countries 1145

exceeded these ratios (World Tourism Organization, 1988), compared to the 19 found by Bryden for 1965.’ Some “tourist countries” are large: in 1988, for example, some 2.1 million tourists accounted for over 18% of Egypt’s current export receipts - close to the 197688 average of 17%. In addition, the tourist sector accounted for 1.3% of Egypt’s GDP, 1.2% of total investment, and at least 1.1% of total emp1oyment.2 Most such countries, however, are small: in four small South Pacific countries in the early 198Os, for example, tourism accounted for over 20% of export receipts, up to 22% of GDP in one case, and as much as 27% of formal employment (Dwyer, 1986).” Similarly, tourism accounted for an estimated 35% of the combined GDP of five small Eastern Caribbean countries in 1986, rising to a high of 72% in Antigua (Shibuya and Ye, 1988).4 Not only is tourism already important in many developing countries but it at least potentially constitutes one of the fastest growing sectors of their economies. During 1980-87, for example, international tourist receipts grew by 46%, or six times faster than exports in general.’ In 1986, developing countries as a whole received $8.6 billion from this source, or a little less than 8% of their total export earnings. The average annual growth of tourist receipts in this period was

*I am grateful to two anonymous referees, to Douglas Hartle, and especially to Donald Brean for comments and to Ramona Dzinkowski for assistance in the preparation of an earlier version of this paper. Final revision accepted: November 14, 1991.

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especially high in East Asia and the Pacific (10.7%) and the Caribbean (8.1%). Although experience suggests that such growth is likely to be highly unstable (Mansfield, 1985), some countries, such as Jamaica, are clearly counting on further expansion in this sector to sustain their economic well-being and others, such as the small island countries of the Eastern Caribbean and the South Pacific, have little choice but to follow the same course. The major benefits of encouraging tourism are, of course, economic: increased foreign exchange receipts, increased employment, and increased economic activity in general.6 In addition, most developing tourist countries, like other developing countries, are under continual pressure to increase tax revenues both to cover expanding expenditures and to satisfy the requirements of external creditors. The extent to which tourism results in increased government revenues therefore constitutes an important dimension of tourist policy. Surprisingly, however, even in the most tourism-dependent countries very little attention has been paid to the question of the appropriate level and form of taxation to be imposed on the tourist industry, and information on the nature and importance of government revenues from tourism is hard to come by and hard to interpret. What data there are, however, suggest that, while some tourist countries manage to direct a fairly sizable share of gross tourist receipts into government coffers. the net revenue gain from tourist activity may sometimes be much smaller. A recent study from the World Tourism Organization (1988), for example, argues that it is not uncommon in “tourist countries” to get lt& 25% of their fiscal revenue5 from this 5ector. and that in some small, highly specialized countries (such as the Bahamas) over SO% of government revenues are dependent on tourism. On the whole, however. it has been estimated that only perhaps 10% of gross tourism receipts go to the governments of Caribbean countries (Bryden, lY73). compared to the 20% or so reported in a number of other countries such as Tunisia and Kenya (de Kadt, 197Y). Such figures may be misleading, however. In the lY7Os, for instance, when tourism in Kenya accounted for about 8% of export receipts and 2.6% of GNP, and an estimated 20% of gros5 tourist receipts went to government, one study estimated that on balance the net contribution of tourism to revenues. after allowing for offsetting expenditures, was much less and perhaps even negative (Bachmann, 19X8).’ Similarly, the “import leakage” from the tourist sector can be high: in Kenya, for example, at least 25% of the groxs foreign exchange

earnings of the sector flowed abroad (Bachmann, 1988) - a proportion that may be much higher in other, smaller countries with less capacity than Kenya to supply the industry from local sources. On the other hand, a recent study of the Maldives found that tourist revenues, even net of direct government expenditures on tourism, accounted for 40% of total government revenue in 1984 (Sathiendrakamar and Tisdell, 1987). Although the very partial data available do not permit more systematic examination of this subject, it is not difficult to think of a number of reasons why the fiscal impact of tourism may differ considerably from country to country and time to time. One such reason, the differing extent to which there are linkages between the tourist sector and the rest of the economy, has already been mentioned. Clearly, if tourism is by design or otherwise confined to an “enclave.” supplied almost entirely from abroad and perhaps even staffed largely by foreign workers, the indirect fiscal benefits accruing to the host country from this activity are likely to be minimal. Another reason may be related to the degree of maturity of the tourist sector: leakage5 abroad are likely to be particularly high in the initial stages of tourism development (Gray, 1987). In addition, as argued in the next section, the inherent nature of the tourist industry varies among countries with different implications for fiscal policy. Nonetheless, the fiscal effect of such factor5 also clearly depends to a considerable extent on explicit policy choices: if governments choose to exempt tourist investment such as hotel construction and operation from import duties and profits taxes, for example, obviously any fiscal gains from tourist development will be both delayed and diminished. If they go even further and explicitly subsidize tourism by providing infrastructure (e.g., airports) free or at heavily subsidized prices, the prospect of net fiscal benefits from tourist activity is even further reduced. The prevalence of both of these features - fiscal incentives and subsidized infrastructure in many tourist countries is one reason why tourism seldom seems to be a major source of revenues. Another reason, discussed later, is the structure of the tourist industry. Nonetheless. as the next section shows, in many ways tourism would seem to constitute a particularly attractive tax base for developing countries.

3. THE ECONOMICS OF TAXING TOURISM In some ways. international

tourism

may best

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be considered a rather peculiar type of export industry in which the export is consumed within the exporting country. The customer not only comes to the producer, but he stays in his house for a while. Unlike most guests, however, tourists are often not prepared to live as their hosts do but rather expect their accommodation and attendant services to meet international rather than local standards. The taxation of tourism therefore raises many of the same economic questions as the taxation of any other export with respect to the sensivitity of demand to price changes, the stability of revenues, and the incidence of taxation as well as important noneconomic questions not faced with respect to other exports (de Kadt, 1979). As a rule, however, the literature suggests that developing countries tend to tax exports more heavily than they should, even taking into account the administrative constraints inhibiting other forms of taxation (Sanchez-Ugarte and Modi, 1987). In contrast, many tourist countries seem to undertax their tourist exports. This conclusion is particularly strong when tourism reflects the exploitation of a unique “touristic endowment” such as the pyramids of Egypt or the game parks of some sub-Saharan African countries. It also holds, although to a lesser extent (as explained below), when the principal touristic attraction a country has to offer is simply its location and climate. In both cases, tourism viewed as an export differs from most other exports of developing countries because each country or, with respect to “climate” tourism, group of countries - with its unique services, faces a less than perfectly elastic demand curve. In principle, therefore, tourism inevitably gives rise to “economic rents,” or returns higher than the marginal social cost of the service provided. Private suppliers of tourist services will obviously try to maximize these rents (above-normal profits), but they may end up dissipating them completely if too many operators enter the field and returns fall to “normal” levels. The aim of policy should thus be, first, to prevent the misallocation of resources reflected in such dissipation (by regulating entry) and, second, to extract as much of the rent as possible, through such devices as auctioning tourist licenses, charging prices above costs on state-owned facilities, and taxing tourist operators. Only the last two of these approaches are discussed in this paper. Taxes on economic rent in principle are ideal sources of revenue because they entail no allocative consequences. Such taxes do not cause profit-maximizing entrepreneurs to alter pricing or production decisions; instead, they simply

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redistribute rents from the suppliers of tourist services (such as hotels) - often foreigners - to the government. Moreover, since the policy goal is presumably to maximize the national gain (in this case, tax revenue) per unit of national resources devoted to tourism, tax policy should often go even further and follow in effect the monopoly pricing strategy of restricting output to maximize the excess of revenue over cost. As already mentioned, two sorts of tourism may usefully be distinguished: what Gray (1987) calls “sunlust” and “wanderlust.” The first refers to the marked tropism of the affluent and not-soaffluent of the rich countries - the annual surge to the south to escape from dreary northern winters to sun, sea, and sand. For such tourists, what matters is what they do, not where they do it: all equidistant (in cost terms) locations with equally amenable climates are thus in competition with each other (and with the sun lamp and indoor swimming pool at home). In contrast, the second sort of tourism involves doing (or seeing) something which is unique to the location visited. Clearly, the economic rents to be captured through tax and pricing policy are much greater in the second case than in the first, and they are also much less likely to be dissipated by competition among competing jurisdictions. Nonetheless, even “sun and fun” destinations - such as most Caribbean islands may still have location-specific rents (returns above the social costs of inputs) that should be extracted for national gain. Despite the rapid growth of international tourism in recent decades and its importance in surprisingly little economic many countries. analysis has been carried out, in part perhaps because of the pervasive data problems afflicting the field. What studies have been done, for the most part in developed countries, suggest that the demand for tourism is both price and income elastic, as well as highly sensitive to both economic and political disturbances. Income elasticities of about two and price elasticities of around the same absolute magnitude (-2) are not uncommon results in such studies (e.g., Paraskevopolous, 1977). If allowance is made, however, for the fact that international transport costs often account for about half of total tourist expenditures, the price elasticity of tourist expenditure with respect to changes in prices in receiving countries is often thought to be -1 or less. A recent study of the heavily touristdependent Eastern Caribbean countries, for example. estimated the long-run price elasticity of travelers from the United States at - 1 S, from Canada at -0.8. and from the United Kingdom at 0 (Shibuya and Ye, 1988). Since 60% of the

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region’s tourists came from the United States and 20% each from the other two countries, the weighted price elasticity was on the order of -1.1. If the price elasticity of tourist receipts is approximately unity, an increase in tourist taxes (e.g., on hotels) will result in a similar increase in tourist prices, a precisely offsetting decline in the volume of tourism, and an increase in tax revenues that will be just offset by a decline in the after-tax returns (rents) received by hotels. In a competitive market such as the Enghshspeaking Caribbean, where different islands are more or less substitutes for one another, if any one tourist destination tries to raise its tourist taxes, it is likely to lose out. On the other hand, the price elasticity of demand for tourism in the region as a whole is inevitably lower than that facing any one island. Although no explicit regional policy coordination has taken place in the Caribbean, the common practice of setting taxes on hotels, or entry or exit taxes, by looking at what the neighbors do has probably reduced the dissipation of rents that would otherwise have occurred as a result of interisland competition. As a rule, most “sun” tourists go to nearby regions: US tourists go to the Caribbean, Europeans to the Mediterranean, and Australians to Bali. As Jenkins (1982) notes, such tourists are generally more sensitive to the characteristics of the tourist experience than they are to the location in which they experience it. Whether “up-market” or “down-market” - the difference is mainly that the latter are much more price sensitive - such tourists generally require significant foreign inputs, in effect to replicate the “home” experience as closely as possible in a different climate. The potential for net revenue generation is thus restricted not only because of competition from other suppliers but also because the net “rent” available for extraction is lower. On the other hand, few people go from, for example, the United States to sub-Saharan Africa to loll on the sand. Tourists from distant locations generally come to developing countries because of such locationally specific factors as wildlife parks or natural or man-made wonders. Such tourism is less likely to be sensitive to price increases, in part simply because local costs constitute a much smaller portion of total travel expenditure but mainly because of the uniqueness (nonsubstitutability) of the tourist experience. To the extent the tourist product is unique (e.g., Egypt’s pyramids or the Himalayas), properly designed tourist taxes should be able to extract substantial economic rent from those who have access to the site. Whether the competitive or the differentiated

model is applicable depends upon whether the tourist views different locations as easily substitutable. For distant Americans and Europeans, for example, the precise differences between game parks in, for example, Kenya and Botswana may be vague, so the two are viewed as substitutes. Nonetheless, the demand of the sort of tourist who goes to Africa one year and to Papua New Guinea or the Galapagos the next is likely to be virtually unaffected by small price differentials resulting from increased taxes. Many actual and potential tourist destinations in the developing world should thus have considerable leeway to increase their taxation of tourism, sometimes significantly. Even in the unlikely event that an optimal tourist tax system from an economic perspective could ever be designed for a particular developing country, however, it would be of little use if it could not be administered.x From an administrative point of view, tourism affords a potentially broad tax base in principle because tourism services are delivered at the retail level, thus encompassing all distributive margins. In practice, however, this advantage is more than offset by the fact that, unlike other exports, tourism does not offer any “tax handle” readily graspable by government. Indeed, in the words of Mansfield (1985)) tourism constitutes a particularly “elusive” tax base. Services to tourists are not provided through only a few easily taxable outlets but rather encompass a wide variety of activities rendered by an equally wide variety of firms and individuals. Tourism is therefore as difficult to tax in many respects as are other domestic service sector activities in developing countries. Even when tourist services are provided by large, easily taxable organizations (e.g., deluxe hotels), it is often difficult to levy taxes effectively in part because of the usual problems developing countries encounter in taxing international businesses (e.g., transfer pricing) and in part because all too often governments have granted such organizations generous tax incentives. To put this point another way, the tourist industry may be divided into several different sectors, each with its own characteristics: transport companies, travel agencies and tour operators, accommodation, and other activities (e.g., the souvenir business, which is itself sharply divided in many countries between shops and sidewalk vendors). In addition, in many countries much of the restaurant and entertainment sector also caters largely to tourists. In Jamaica, for example, 63% of the tourist dollar goes to accommodation. 9% to meals, 5% to local transport, and 11% to shopping in general. In

TAXING

Indonesia, the comparable figures are 35% for accommodation, 18% for meals, 9% for transport, and 15% for shopping. Other countries for which this information is available - India, The Gambia, Bahamas show a roughly similar pattern (World Tourism Organization, 1988). The best information seems to be available for Kenya, where the single most important contributor to the earnings of the tourist industry was the hotel sector, which accounted for half of all tourist receipts (Summary, 1987). Of the 46 game lodges and hotels, with a total of 3,470 beds, 25% - a proportion reportedly lower than in many other countries - were foreign owned (Jommo, 1987). About 7.5% of hotel business and almost 100% of the business of tour operators came from tourists. In addition, an estimated 50% of entertainment receipts, 40% of restaurant receipts, and, perhaps more surprisingly, 28% of the receipts of shops were also attributable to tourist expenditures (Bachmann, 1988). The most important segment of the industry, the hotel sector, is the most capital intensive: owing in part to the extreme sensitivity of international tourism to political events and “image” problems such investment is inherently risky, which is one reason why foreign capital has often proved reluctant to invest in this sector in most developing countries without substantial official assistance via grants, tax incentives, and guarantees. The unfortunate result is that the easiest part of the international tourism sector to tax, hotels, is also the most likely to be formally freed from tax.” On the other hand, the most important part of the sector in financial terms, the international transport sector, is for the most part beyond the reach of the “exporting” governments. The only tax base left in many countries is thus the fragmented small businesses that constitute the balance of the tourism sector and are all too often either in the (untaxed) “informal” sector or the so-called hard-to-tax part of the formal sector.“’ Moreover, given the high degree of competition manifest with respect to, for example, taxis and tour guides in many developing countries, there may be few “rents” left to be taxed in any case. For these reasons, as shown in the next section, “tourist taxation” in most countries consists of little more than a few specific taxes.

4. TOURISM

AND “TAX HANDLES”

The aim of this section is less to depict the present level of taxes in “tourist” countries than to describe briefly the sorts of taxes used to tax tourism in those few developing countries for

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which some information was readily available.” Basically, tourism can be taxed in two ways: through the general tax system, particularly profits and sales taxes, and through special taxes imposed on “tourist” activities, particularly entry and exit taxes and taxes on hotels. In practice, the most important taxes on tourism in almost every developing country are taxes on hotel services, whether levied as part of a general sales tax or as special “excise” taxes.

(a) Profits and sales taxes No developing country seems to obtain much revenue from levying income and profits taxes on the tourist industry. Although the full data needed to support this statement are not available anywhere, it seems plausible for three reasons mentioned earlier. First, about half of international tourist expenditures are on transportation (especially air travel), and developing countries seem most unlikely to be able to secure much revenue from this source. On the one hand, if they have a national airline, it is more likely to be a source of losses than of profits. On the other hand, as a rule they are able to assert and enforce a claim on some share of the profits of international air companies - assuming such companies are making any rofits - only to a very limited extent, if at all.’ P Second, perhaps as much as half of nontransportation tourist expenditures in many countries go to a variety of mostly small and relatively unorganized tourist activities - tour guides, souvenir vendors, taxis, etc. - that are hard to tax under the regular income tax in any case. Finally, the share of tourist expenditure that accrues as hotel profits, while easy to tax in principle, is often exempted in practice as a result of the common policy of granting generous fiscal incentives to tourist hotels. The principal reason for the relatively low net fiscal return from tourism in the Caribbean noted above, for example, appears to be the widespread and extremely generous exemptions extended to the hotel industry. Although the effects of these incentives on the location of facilities in one country rather than another are quite unclear (Bryden, 1973), their deleterious effect on net government revenues in the region as a whole as a result of the incentive competition among countries seems clear. On the whole, there seems little to be said for granting incentives to hotels: the effectiveness of such incentives in encouraging additional investment is suspect while their effect in diminishing national gains from such investment as takes place is manifest.‘”

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In contrast to the situation with respect to profits taxes, a number of countries levy sales taxes on hotel (and some other) services as part of a general sales tax. Zimbabwe, for example, levies a 15% sales tax on a wide variety of activities including hotels, air, water and land transportation, and international telecommunications. Similarly, Mauritius and Morocco both levy a 12% tax on services, including hotel services. It is more common, however, to impose separate and special taxes on hotels, as shown in the next section. The best way to impose taxes in hotel services is by no means settled. In a review of taxation in sub-Saharan Africa, for example, the International Monetary Fund (1981) strongly recommended on administrative grounds that where services are taxed, such taxes should be imposed by separate levies on selected services such as hotels rather than by general sales taxes. On the other hand, Bird (1991) recommended that the existing special hotel taxes in Jamaica should be replaced by a tax of 15% on the entire hotel bill (including restaurant and bar charges) for three reasons: to fit in better with a proposed sales tax reform (the introduction of a 15% value-added tax), because no apparent purpose was served by the existing discrimination among classes of accommodation, and because the yield of an ud vulorem tax, unlike that of flat-rate taxes, would expand automatically as the tax base expanded. Where hotels and other tourist services are taxed under a general sales tax, it is usually impossible to disaggregate tax revenues sufficiently to determine the extent to which taxes are paid by tourists as opposed to local residents. If tourists have a more inelastic demand for some goods, higher rates levied on, for example, imported spirits might constitute one way of taxing tourists, but information is almost always inadequate to ursue such “optimal tax” strategies very far. iP Occasionally, discussions of the costs and benefits of tourism suggest that allowance should be made for an indirect “multiplier” effect of tourist spending on tax revenue. but this factor can probably be safely neglected in most countries. First, the limited linkages between tourism and the rest of the economy suggest such effects are not likely to be very important (Mansfield, 1985). Second, as already noted, the “import leakage” of tourism is likely to be high, especially in a period of tourist expansion. Finally, of course, since similar “multiplier” effects would basically occur if someone flew over the country dropping dollar bills, care must be exercized in attributing them to investment in any particular industry.

(b) Special tourist taxes Special taxes on tourism fall into two classes: taxes on entry and exit and hotel taxes. Some developing countries, such as Egypt, impose fairly substantial visa fees on tourists, but exit taxes are probably more common. A few years ago, for instance, Jamaica subjected departing travelers to an airport departure tax at a rate of around US$.5.‘s A 1985 report called this tax, which yielded a little less than 1% of total tax revenues in 1985, an “accustomed nuisance” but noted its collection was relatively costly, although apparently efficacious (Bird, 1991). Similar low-rate departure taxes have existed at different times in a number of other Caribbean countries such as Grenada (US$2) and St. Lucia (USS4), as well as in many other countries around the world. In Southeast Asia, for example, Tisdell (lY83) reported such taxes in the early 1980s of US$l-6 in Indonesia, Singapore, Malaysia, Philippines, and Thailand. In Africa. Kenya had an airport embarkation tax of about $20 and Zimbabwe a departure tax of $10. Similar taxes were levied, inter aliu, in Malawi. Tanzania, and Zambia and also probably other countries. A recent tax commission, however, recommended that the Zimbabwean tax should be replaced by a tax levied on air tickets sold (Chelliah, lY86), apparently without recognizing that this change would convert it from a tax largely on departing tourists (and business travelers) to a tax largely on local residents. Jamaica also imposed a more unusual hotel accommodation tax in the form of a flat-rate levy depending on hotel class and season, with rates (in 1985) of US$4-12 per night per room. In addition, hotels and resort cottages were subjected to an annual “license fee” of about USSlOt&200 per room, with the rate depending on the class of accommodation. Together, these two special hotel taxes accounted for a little more than 2% of tax revenues. Similar taxes existed at somewhat lower rates in Grenada (7.5%), St. Vincent (5%), and St. Lucia (7%), while Dominica levied a 10% tax on hotel room charges only. Again. such taxes are also common in many other countries: in Southeast Asia, for example, Tisdell (lY83) reported hotel taxes of 3-16.5%. South Africa had a 13% tax on hotel accommodation. Senegal levied a special 12.S% tax on hotel accommodation. Tanzania also levied a hotel tax of 12.5% on accommodation only and 10% on accommodation and food. Malawi levied a 10% sales tax on both hotels and restaurants. The hotel taxes imposed in Zimbabwe and Kenya embody an interesting feature. In Zim-

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babwe, a special hotel bed levy is imposed at decreasing rates according to the classification of the hotel (e.g., 60 cents per night for a five-star hotel, 50 cents for a four-star hotel, and so on): the very small revenues from the hotel tax go to the Ministry of Natural Resources and Tourism. Although the recent Tax Commission (Chelliah, 1986) categorized this tax as an unproductive nuisance and recommended that it be abolished, there is at least the vestige of a “benefit” rationale underlying this assignment of revenues. The particular design of this tax, with its specific rates and discrimination by class of hotel, may make little sense, but the basic idea of linking taxes on the tourist sector and outlays presumably related to tourist activities makes sense, as developed further below.‘h Similarly, the Kenyan state tourist authority ran a hotel management and training college financed in part by a Hotel Training Levy on hotels and restaurants (Jommo, 1987). The hotel tax was levied on all premises with accommodation for five or more persons, excluding certain low-cost accommodations and leased premises. Its base included accommodation and food but excludes service charges and beverages. The rate of the tax was 17.5% if accommodation alone was provided and 12.5% if food was also provided. Hotels subject to such taxes often argue, with that such competitors as some justification, “tourist-type” restaurants and persons renting seaside vacation homes should also be taxed. As Bird (1991) suggests, however, the extent to which the tax base should be expanded to encompass such activities is essentially a question of administrative feasibility. In the specific case of Jamaica, for example, with the possible exception of a few “luxury” restaurants, it is probably not feasible to apply special taxes to small “tourist” businesses except as part of a general revision of the taxation of the hard-to-tax sectors. Finally, many countries impose special taxes on entertainment and gambling, often in part to tax tourists. While little net revenue seems to be generated by such activities, what there is seems sometimes to be earmarked in rather peculiar ways. In Egypt, for example, where casinos pay a substantial proportion of their net revenues to the government, half of these “royalties” go to the Tourist Fund to finance certain activities, but the other half go to finance housing for the employees of the Ministry of Finance. Similarly, Zimbabwe levies a 15% tax on the gross revenue of casinos, with some of the revenue reportedly being used to support tourism in the affected areas. Taxes on hotels and airport departures may be

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the easiest and most common ways to tax tourism, but these levies seldom produce much in the way of tax revenue. Although Kenya appears to have traditionally had by far the highest effective rate of taxation in relation to tourist expenditure, such taxes accounted for only 2.6% of total tax revenue in 1982 (Mansfield, 1985). Indeed, it appears that special tourist taxes, outside of a very few small islands such as the Bahamas where figures as high as 10% may occasionally be attained, seldom yield more than l-2% of tax revenue even in “tourist” countries (Mansfield, 1985).

5. LESSONS

ON TAXING

TOURISTS

The task of securing government revenues from the tourism industry may be divided into four, interrelated activities: (a) charging appropriate fees for the use of public resources; (b) assigning the revenues collected to different government organizations; (c) enforcing the normal tax system on firms and individuals engaged in the tourist industry; (d) imposing special taxes and levies on tourist activities. Each of these activities is likely to give rise to particular problems in the circumstances of each developing country. This concluding section pulls together under these four headings some possible lessons for developing countries with a significant or potential tourist industry.

(a) Charging for public resources The main point here is simply to emphasize the necessity of charging appropriately for the use of public resources if such resources are to be exploited only to the economically desirable limit. and not beyond to the point of degradation and even disappearance. Of course, if the country is to derive the maximum benefit (revenue) from tourism, it should, as noted earlier, charge tourists more than this cost, but proper charging policy is necessary just to avoid losing as a result of tourism. In all too many developing countries, the prices charged (e.g., for access to a national park) are clearly well below the social marginal cost imposed as a result of an additional user. In practice, of course, determining this cost, and hence the appropriate price, is in part a matter of judgement and in part dependent on the full utilization of all relevant information. At the very least, however, the admission fees to wildlife reserves (or to hunting areas) should clearly be set sufficiently high to cover both the budgetary costs of the relevant regulatory agencies and

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any opportunity costs imposed on local residents (e.g., as a result of limiting their access to customary food supplies or their ability to destroy wildlife that damages their crops or herds). All ancillary services (e.g., camping, concessions) should of course also be provided only on a “full cost” basis. Tourists who are not willing to bear at least this level of cost are economic losers as far as the country is concerned. Where most tourist activities take place on state or tribal lands, as in some African countries, an obvious way to charge socially appropriate fees is through the rent or lease charged to tourist operators for use of these lands. In principle, one might envisage an auction system being used to lease these lands since, under competitive conditions, the amount the winning bidder would be willing to pay would be such that he or she would just earn a normal rate of return, with the state collecting all the economic rent (excess profits) the bidder would otherwise have made. While life in developing countries is seldom this competitive, much more could be done along these to ensure adequate national gains from tourist activities. Two other points about fees may be worth mentioning. First, it may be deemed appropriate to charge “full” admission fees only to nonresidents, on the grounds either that residents contribute sufficiently through their regular taxes or that they are entitled to enjoy their own country without further payment. At the same time, obviously an additional visitor to a national park, whether resident or nonresident, imposes some specific costs on society and should in principle be charged accordingly. If such discrimination is considered desirable, it can easily be achieved by levying a “two-part” fee. The first, and larger part of the fee, can be charged to nonresidents either as part of their tour package or, in the case of individual travelers, on their first admission to a park. This fee would then be valid for some period of time, say, 30 days or a year (as in the case some national park fees in North America). The second, smaller fee, might then be charged on a per car or per tourist basis for each entry to a national park or wildlife reserve (as with many provincial parks in Canada). More importantly, it should be emphasized that designing an appropriate charging or pricing system for tourist access to public resources is a quite separate activity from designing an appropriate tax system for the tourism industry. In practice, the distinction between taxes and charges may tend to be blurred as, on the one hand, governments use the “handle” provided by

a user fee to impose a tax at the same time and, on the other hand, those who stand to gain personally from increased tourism attempt to lump together both taxes and charges and argue that both need to be set at competitive levels. Both charges and taxes provide public revenue, but in principle they have nothing else in common. Charges are intended to defray the costs imposed on society by the use of public resources and thus to ensure that the use of those resources does not impose losses from a social point of view. There are no “competitive” considerations to be taken into account in setting such charges because if charges are set below this level, the result will be the overexploitation and degradation of the nation’s endowment of touristic resources. Taxes, in contrast, are intended to generate revenue for public purposes in general, and taxes on exports (tourism) can only be set at what the market will bear. The following discussion of taxation assumes that user charges have been appropriately determined.

(b) Assigning the revenues from tourist taxes First, however, it is important to recall that the form and level of taxation are not independent of the question of how it is spent.” There are two aspects of this problem that call for comment here. Both are, of course, even more applicable to the tourist charges just discussed than to tourist taxes in general. First, there is some evidence to suggest that it may be possible to levy higher taxes on particular activities if the funds (or some portion of them) are spent in such a way as to benefit the taxpayers. Two obvious examples might be the improving of the infrastructure facilities available to tourists and the training of personnel for the tourist industry. A large admission fee cum tax to national parks, for example, would doubtless be much more palatable both to the industry and to tourists if accompanied by clear evidence that at least some of the funds collected went to improve the facilities provided in and near the national parks (e.g., roads, campsites, and other accommodations). In some countries, there is also ample room for developing better trained personnel in the tourist industry, not only in hotels but perhaps especially as guides (if the experience reported in Almagor, 198.5, is typical. The traditional reluctance to earmark revenues from particular taxes to specific activities, of course, has a sound rationale: but there is good earmarking and bad earmarking, and properly designed tourist taxes financing services that

TAXING

generate still more tourist taxes would appear to fall into the latter category.‘s Second, and more important, it is critically important to ensure that the local communities near major tourist facilities receive their fair share - and perhaps a little more - of whatever public revenues are generated by tourist activities. Just as there is a clear conflict between the maintenance of a wildlife reserve and the exploitation of that reserve for tourism, so there is often an even clearer conflict between the reserve, the tourism, and the economic wellbeing of the local population (Britton and Clarke, 1987). The new phenomenon of “ecotourism” - the advent of the ecologically sensitive (and well-off) tourist who wants to view nature in the raw and depart leaving only footprints and taking only photographs - may reduce the conflict between nature and man, but the potential conflict between visitor and local resident remains important. The local population must not only be adequately compensated for the loss of unrestricted access to the reserve and for any damage done to their interests by wildlife, they must be sufficiently rewarded out of the revenue generated by tourism to compensate for the inevitable discomfort and, perhaps, relative sense of deprivation likely to arise from the mingling of people with completely different lifestyles.‘” Unless the relevant local communities feel they clearly gain from tourism, in terms of additional and better jobs, better infrastructure, and better access to the public purse, they are unlikely to welcome expanded tourism activities even if it is in the national interest for them to do so. Tourism is among the most sensitive of industries to “atmosphere,” and local hostility is as much a deterrent as political unrest,20 bad weather, or poor facilities: the word will soon get around, and the inflow of tourists will dwindle. It is therefore critical that any policy of taxing tourists provide, so to speak, the first cut of the tourist beast to the inhabitants of the affected areas.

(c) Taxing the tourist industry In principle, there are no special problems in applying the normal income tax system to the tourist industry. Corporations engaged in providing tourist services should be taxed like any other corporations, and the individuals they employ should be subject to income and payroll taxes in the same manner as any other employed individuals. Similarly, self-employed tourist operators should be taxed like any other selfemployed persons. In practice, however, as

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mentioned earlier, problems arise in taxing tourism in many developing countries for two reasons: the important role played by transnational firms and the prevalence of always hardto-tax small firms (including individuals) in this industry. Two basic strategies may be followed in dealing with these problems. The first is simply to attempt to enforce the general tax system as effectively as possible both on firms operating across international boundaries and on small “hard-to-tax” local businesses. These tasks are not easy, but there is a good deal of guidance in the literature as to how to go about them in ways that are both within the reach of developing countries and likely to produce additional revenues in an economically beneficial fashion.2’ There is nothing in the nature of these problems that requires special treatment of the tourism, or any other, industry. The general problems of tax administration in developing countries call for general administrative solutions.22 A second approach, however, is to note that these problems are concentrated in particular industries and to focus on developing “industryspecific” solutions. Many countries, both developed and developing, have, for example, devised special taxes - often levied on the basis of gross receipts rather than any net income concept - to deal with such difficult to tax industries as banking, insurance, contractors, international transportation companies, and agricultural exporters. Sometimes such taxes are levied in lieu of regular income taxes: for example, the Philippines at one time levied a tax of 2.5% on the gross Philippine billings of international carriers. In other instances, as in the case of the requirement in many countries to withhold and remit to the tax authorities a small percentage (e.g., 2%) of payments to contractors, in principle such gross receipts taxes are envisaged more as a form of withholding, with payees entitled to claim a credit for the tax withheld when they file their own tax returns. In practice, however, experience in various countries that have used this system (e.g., Indonesia, Egypt) suggests that such “withholding” also usually turns out to be a final, rather than an interim, tax, as few if any contractors appear to file tax returns. A final and in some ways most interesting example of the use of a gross receipts tax base as a means of bolstering the income tax system is found in a number of francophone African countries, which levy a “minimum” corporate tax at a rate of l2% of turnover; a similar system was employed in the early 1980s in Colombia.‘” Three features of this varied international experience with the gross receipts basis of taxa-

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tion deserve emphasis, however. First, the rate is generally quite low - usually not more than 2%. There are, however, exceptions: in the Philippines, for example, a 15% tax was levied on the gross Philippine income of film distributors and a 20% tax on the gross receipts of restaurants and entertainment outlets.24 Second, the tax is often levied as part of the income tax system, either as a minimum tax, a withholding tax, or a tax in lieu of income taxes. In particular, it is not at all uncommon to see gross receipts taxes that are creditable against income tax liabilities: the opposite case, of an income tax credited against a gross receipts tax, appears to be unknown. This is not surprising in view of the third, and most important, feature of the gross receipts approach to taxation, namely, that such taxes are inherently sales rather than income taxes - for instance, in the sense that the tax liability bears no relation to the characteristics of the taxpayer but is instead determined solely by the size of the transaction. Indeed, the problem of taxing tourism has been approached in most countries not by attempting to make up for deficiencies in income tax administration by imposing sales taxes but rather by applying sales taxes in their own right to all or some of the services provided to tourists. In countries with general sales taxes, particularly value-added taxes, these taxes are usually extended to hotel accommodation and other tourist activities, although sometimes, as in Switzerland, Belgium and Morocco, at reduced rates for competitive reasons (Tait, 19Xx). In developing countries, however, as a rule only a limited range of services are subjected to so-called ‘general’ sales taxes. Instead, special taxes tend to be applied to such services as those provided by tourist hotels. Although (as in the case of Jamaica cited above) the special taxes applied to tourist services may often be intended to approximate to the general level of sales taxation and hence do not really constitute industry-specific taxation, they are nonetheless discussed separately in the next section. In view of the limited tax base outside of imports in many small countries, effective taxation of the tourism industry seems likely to take the form of special taxes levied directly on such tourist services as hotel accommodation, rental cars, entertainment. and restaurants.

(d) Special taxes and incentives Most of the country experience discussed above related to such special tourist taxes. The most important tourist tax is invariably that on

accommodation (and related catering), for two quite distinct reasons. First, expenditure on this item usually accounts for half or more of “in country” tourist expenditures - i.e., excluding international travel, which is in any case largely beyond the tax reach of recipient countries. Accommodation therefore accounts for a substantial fraction of the potential tourist tax base. Second, and more important, since accommodation is generally provided by easily identifiable, fixed establishments such as hotels, it is relatively easy to tax, so that it accounts for a much greater fraction of the reported (or discoverable) tax base. Any country that wants to levy a special tax on tourism therefore invariably relies most heavily on taxing the gross sales of hotels, rest houses, and similar establishments.25 The only formal studies that have been done of the incidence and effects of such taxes unfortunately refer only to US experience. One such study (Combs and Elledge, 1979) suggests that the demand for accommodation is relatively inelastic so that such taxes are fully shifted forward. In contrast, another study (Fujii, Khaled, and Mak, 1986) concluded that in the case of Hawaii perhaps one-third of the tax remained on the industry and consequently had a negative effect on the supply of lodging. If. as may be the case in some “nature tourist” countries, most visitors in effect camp out, there is clearly much less of a tax base than if they are accommodated in more formal facilities. In the long run, if tourism is to be developed as a productive and stable revenue base in any country, it will probably be essential to provide at least some permanent facilities - perhaps along the lines of the luxury hotel complex created. at more or less an environmentally correct distance, in the central Australian tourist site of Ayers Rock or near Petra in Jordan. As and when such infrastructure is developed, taxes can be levied accordingly, perhaps in the form of a l&15% tax on gross hotel receipts (including food and beverages) as in most countries. Even before such taxable facilities are dcvcloped, it may sometimes be possible to impose some fixed tax per guest (or tent?) per day, perhaps classified in accordance with the prcaumed degree of “luxury” of the accommodation, along the lines of the Jamaican or Zimbabwean hotel taxes mentioned earlier. Alternatively, as discussed above. perhaps a tax could be levied on the gross receipts of safari and other tourist operators. Although there appears to be little precedent for such a tax (outside of value-added tax countries). there would seem to be no reason why such a tax could not be levied at a rate of 1tL 15%. This tax would be no easier to enforce than

TAXING

any other tax on small businesses, but a good case can be made on both equity and efficiency grounds for doing what can be done in this respect.26 Taxes paid primarily by foreigners do not, of course, give rise to equity concerns in the taxing country. As far as efficiency is concerned, even a 15% tax on a relatively small portion of his or her total trip cost is unlikely to deter an international tourist. Should government subsidize private investment in the tourist industry, as so many countries have done? The correct general answer is almost certainly “no” (for a somewhat more equivocal assessment, see Jenkins, 1982).27 If private investors are not willing to risk their own funds in the tourist business, it is not clear why public money should remove the risk and leave them the profit, as has been the case in too many “sun and fun” countries. The tourist business is indeed inherently risky, and climate, politics, and world economic cycles, ensure that it will continue to be so. High risks must, of course, be compensated by high returns if such activities are to be developed by the private sector. Unless the public sector has some special knowledge of the tourist market it can exploit, however - a most unlikely prospect - it would seem well advised

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to leave this chancy business to those who specialize in it. International hotel chains, tour agencies, and similar specialists will, of course, attempt to exact the best bargain they can (the highest return) by arguing for lower charges and taxes, and higher government subsidies, on all kinds of plausible competitive and other grounds. But there seems no reason such special pleading should be any more heeded in this industry than in any other. As always, the appropriate test for public policy is whether it is more nationally advantageous to expend a dollar in one way (e.g., by foregoing taxes on a luxury hotel) than in another (e.g., on primary schooling). On this test, it seems unlikely that many developing countries should subsidize the tourist industry. On the contrary, as this analysis and review of the fiscal instruments available to most developing countries suggest, the key to realizing national benefits from tourism is (i) to introduce adequate “charging” policies where possible; (ii) to impose adequate taxes on hotel accommodation - invariably the key to tourist taxation; and (iii) to avoid engaging in intercountry competition to provide special incentives for investment in the tourist industry.

NOTES 1. Another measure sometimes used to indicate the relative importance of tourism for a particular country is “tourist density” (tourists per 100 inhabitants): Bryden (1973) found a ratio of 0.9-3.69 in the countries he examined. A study of 20 of the least developed countries in 1980 found ratios varying from a low of 0.06 in Bangladesh to a high of 32.88 in the Maldives (Cater, 1987). Even for countries with low “density” indexes, of course, tourism may be important in absolute terms. 2. Calculated from data in Central Bank of Egypt (1989), Ministry of Planning data on employment in the tourist sector, and CAPMAS (1990). In Egypt, as in many countries, there are many inconsistencies in data relating to the tourist sector, and somewhat different figures can be obtained from other sources e.g., Ministry of Tourism (1989). 3. The Vanuatu,

four countries and Tonga.

are

Fiji,

Western

Samoa,

4. The countries are Antigua, Dominica, Grenada, St. Vincent, and St. Lucia. The highest proportion of GDP attributable to tourism appears to be 84% in the Bahamas (World Tourism Organization, 1986). Data discrepancies on such matters can be enormous, however: for example, Shibuya and Ye (1988) show Antigua’s tourist receipts to be US$148 million in 1985 compared to the US$84 million shown in World

Tourism Organization (1986). Such problems are by no means confined to developing countries: in 1985, for example, British data show that Britons spent 12.5 million nights in West Germany, while German sources give the same figure as only 2.5 million! (“Travel and Tourism Survey,” The Economist, March 23, 1991, p. 5). As noted earlier with respect to Egypt, all figures in this field should thus be regarded with considerable caution. 5. All figures in this paragraph Tourism Organization (1987).

are based on World

6. In contrast, most of the costs associated with tourism are social (and environmental) in nature, although this important aspect of tourism is not discussed here: see, for example, Bachmann (1988), Britton and Clarke (1987), and de Kadt (1979). 7. Bachmann (1988) found government outlays with respect to wildlife and tourism to be approximately twice as large as government receipts from tourism. While it is arguable whether it is correct to attribute all wildlife expenditures to tourism, the general point is unaffected: it can be very misleading to look at only one side of the budget in assessing an industry’s contribution to the public treasury. 8. Copeland (1990) shows that when - as argued above - countries have some degree of market power

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in tourism, they may use optimal commodity taxes to “export” taxes to foreigners (tourists) by taxing more heavily products figuring more prominently in their consumption. As might be expected, such taxes will be higher the more inelastic the demand for tourism in the country concerned; they will also be higher the more inelastic the demand for foreign travel by domestic residents since what the government is doing in this exercise is balancing the rent extracted from tourists against the induced distortion between domestic consumption and foreign travel (imports) by domestic consumers. Although Copeland (1990) also argues that - as tourist operators frequently assert - in some cases optimal commodity taxes should actually be lower on goods demanded mainly by tourists to minimize the distortion imposed on domestic consumers without deterring tourism unduly, the relevance of this analysis to the real world in which most developing countries find themselves seems limited for a number of reasons: for example, the taxes in question are assumed to apply to tourists and domestic consumers alike and to be administered costlessly, and foreign vacations for domestic residents are assumed to be a real possibility. 9. In Egypt, for example, tourist hotels (like other approved foreign investments) benefit from a tax holiday of 5-15 years if located in a “newly-established” area - as well as from various concessions on import tariffs and foreign exchange regulations. 10. For a discussion of techniques that may be used to reach the latter, see Bird (1983). 11. Unless otherwise indicated, the principal sources consulted in compiling this very partial account are Bryden (1973), de Kadt (1979), Mansfield (1985), and International Bureau of Fiscal Documentation (various years). As the different dates of these references suggest, there is no guarantee that the taxes discussed here are those currently in force in the countries in question. In many cases, only direct visits to the countries concerned can provide current and complete information. The size of the information problem in this area may perhaps be illustrated by the fact that Mansfield (1985), who could draw on over two decades of studies by the International Monetary Fund’s Fiscal Affairs Department throughout the world, was also only able to provide very partial information on tourist taxation in a half-dozen countries. 12. Although further discussion of this complex issue is not appropriate here, it perhaps deserves mention that only through some form of “formula apportionment” are developing countries likely to be able to tax the profits of international transportation companies very effectively. See Bird (1988) for a fuller discussion. 13. For further discussion of the effectiveness and design of incentives. see Bird and Oldman (1990). In the case of the Caribbean region, as mentioned earlier, the elasticity of demand facing each individual island is higher than that for the region as a whole: a degree of collusion between the different islands could therefore make all better off - but the incentive for any one

island to offer investors means unstable. 14.

more that

favorable any such

See also the discussion

terms cartel

in note

to potential is inherently

9.

15. In addition, local purchasers of air tickets presumably local residents - were subject to a “stamp tax” of around US$S. 16. See also the discussion in Bird (1984) of a 5% hotel services tax destined to the National Tourist Fund in Colombia. 17. For extended (1990).

development

of this theme,

see Bird

18. Any advocacy of earmarking is viewed with great suspicion by many fiscal specialists, often with good grounds in view of the many inappropriate examples of this practice that may be found around the world. For an extended discussion of the pros and cons of assigning revenues to particular expenditures, see Bird (1984). 19. Similar problems may arise even with “enclave” separation although see Hughes (1987) for an argument that “enclave tourism” is most likely to give both sides of the transaction what they most want. 20. See, e.g., Teye (1988) on Ghana on Fiji.

or Dwyer

(1986)

21. For a detailed discussion of how to deal with small business (and other hard-to-tax local activities). see Bird (1983). Although it is considerably more difficult to set out in a concise fashion how best to deal with transnational tax problems, a preliminary approach is suggested in Bird (1988). 22. Much the same may be said with respect to the obvious difficulties tourism causes for exchange control systems. Currency brought in by tourists may well escape the official control system more easily than the proceeds of other exports, but serious problems in this respect are more likely to indicate there is something wrong with the exchange system than with tourism (see Lehmann, 1980). 23. For an extended critical discussion of such “minimum” taxes in Latin America, see Bird (1992). 24. These high rates reflected the well-founded belief that the reported receipts in these activities substantially understated the real receipts. Unfortunately, attempting to cope with underreporting by raising rates is a self-defeating activity as the higher rates increase the reward to evasion. which presumably adjusts accordingly. 25. The only other significant possibility is some sort of “embarkation tax” levied on, for example. departures by air. While, as shown earlier. such taxes are not at all uncommon. they are invariahly regarded hy

TOURISM

TAXING tourists collect.

as a great

nuisance

and

are quite

costly

to

26. The problem is exacerbated if, as is sometimes the case, the businesses in question are foreign owned, which may facilitate hiding the receipts by collecting and retaining the bulk of their receipts outside the country.

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27. Tisdell (1983) argues in a partial equilibrium framework that one may sometimes wish to subsidize tourists (e.g., through low internal air transport, hotel incentives) although the circumstances required for this policy to make sense seem unlikely. For a general equilibrium analysis, which also suggests subsidization is the correct policy in some cases, see Copeland (1990).

REFERENCES Almagor, U., “A tourist’s ‘vision quest’ in an African game reserve,” Annals of Tourism Research, Vol. 12 (19X5), pp. 31-47. Bachmann, P., Tourism in Kenya: A Basic Need for Whom? (Bern: Peter Lang, 1988). Bird, R. M., “Tax reform in Latin America: A review of some recent experiences,” Latin American Research Review, Vol. 27 (1992). pp. 7-34. Bird, R. M., “The taxation of services,” in R. W. Bahl (Ed.), The Jamaican Tax Reform (Cambridge, MA: Lincoln Institute of Land Policy, 1991). Bird, R. M., “Expenditures, administration, and tax reform in developing countries,” Bullefin for Infernational Fiscal Documentation, Vol. 44, No. 6 (June 1990), pp. 263-267. Bird, R. M., “Shaping a new international tax order,” Bulletin for International Fiscal Documentation, Vol. 42, No. 7 (July 1988), pp. 292-299. Bird, R. M., Intergovernmental Finance in Colombia (Cambridge, MA: Harvard Law School International Tax Program, 1984). Bird, R. M., “Income tax reform in developing countries: The administrative dimension,” Bulletin for International Fiscal Documentation, Vol. 37, No. 1 (January 1983). pp. 3-14. Bird, R. M., and 0. Oldman (Eds.), Taxation in Developing Countries, Fourth edition (Baltimore, MD: Johns Hopkins University Press, 1990). Britton, S., and W. C. Clarke, Ambiguous Alternative: Tourism and Small Developing Countries (Suva. Fiji: University of the South Pacific, 1987). Brvden, J. C.. Tourism and Development: A Case study of the Commonwealth Caribbean (Cambridge: Cambridge University Press, 1973). CAPMAS (Central Agency for Public Mobilisation and Statistics), Statistic;1 Year Book 1952-1989 (Cairo: CAPMAS June 1990). Cater, E. A., “Tourism in the least developed countries,” Annals of Tourism Research, Vol. 14 (1987), pp. 202-226. Central Bank of Egypt, Annual Report 1988189 (Cairo: Central Bank of Egypt, 1989). Chelliah, R., Report of the Commission of Inquiry into Taxation (Harare: Government Printer, 1986). Combs, J. P., and B. W. Elledge. “Effects of a room tax on resort hotel/motels,” National Tax Journal, Vol. 32 (1979), pp. 201-208. Copeland, B. R., “Taxing tourists: Optimal commodity taxation and public goods provision in the presence of international tour&m,” Working Paper t?o. 90-t (Edmonton: University of Alberta, Department of Economics, 1990).

de Kadt, E., Tourism - Passport to Development? (New York: Oxford University Press, 1979). Dwyer, L., “Tourism,” Islands/Australia Working Paper No. 86-3 (Canberra: Australian National University National Centre for Development Studies, 1986). Fujii, E., M. Khaled, and J. Mak, “The exportability of hotel occupancy and other tourist taxes,” National Tax Journal, Vol. 38 (1986). pp. 69-78. in economic Gray, H. P., “The role of tourism development,” in J. Millett (Ed.), The Role of Tourism in Development, Institute of National Affairs Discussion Paper No. 89 (Port Moresby: Institute of National Affairs, 1987). Hughes, A. J., “Myths of the tourist industry.” Africa Report (May-June 1979), pp. 34-43. International Bureau of Fiscal Documentation, Survey of African Tax Systems (Amsterdam: IBFD. various years). International Monetary Fund, Taxation in Sub-Saharan Africa Occasional Paper 8 (Washington: IMF, 1981). Jenkins, C. L., “The use of investment incentives for tourism projects in developing countries,” Tourism Management, Vol. 3 (1982), pp. 91-97. Jommo, R. B., Indigeneous Enterprise in Kenya’s Tourism Industry (Geneva: lnstitut Universitaire d’Etudes du Developpement, 1987). Lehmann, A. C., “Tourists, black markets and regional development in West Africa,” Annals of Tourism Research, Vol. 7 (1980). pp. 103-119. Mansfield, C. Y., “Taxation 0; international tourism in developing countries,” Mimeo (Washington. DC: International Monetary Fund 1685). Ministry of Tourism, Egypt Tourism in Figures (Cairo: Ministry of Tourism, 1990). Pa;askevopoulos,-G. N., An Econometric Analysis of International Tourism (Athens: Center of Planning and Economic Research, 1977). Repetto, R., and M. Gillis (Eds.), Public Policies and the Misuse of Forest Resources (Cambridge: Cambridge University Press. 1988). Sanchez-Uaarte, F.. and J. R. Modi, “Are extort duties optimal in developing countries?” in V: P. Gandhi et al., Supply-Side Tax Policy: Its Relevance to Developing Countries (Washington, DC: lnternational Monetary Fund, 1987). pp. 279-320. Sathiendrakamar, R., and C. Tisdell, “Tourism and the economic development of the Maldives,” Annals of Tourism Research, Vol. 16 (19X7), up. 254-269. Shibuya, H., and S. Ye. “To&ism in Eastern Caribbean countries,” Mimeo (Washington, DC: lnternational Monetary Fund, 1988).

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contribution to the Summary, R. M., “Tourism’s economy of Kenya,” Annals of Tourism Research, Vol. 14 (1987), pp. 531-540. Tait, A. A.. Value Added Tax: International Practice and Problems (Washington, DC: International Monetary Fund. 1988). Teye, V. B., “Coups d’etat and African tourism: A study of Ghana,” Annals of Tourism Research. Vol. 15 (1988), pp. 329-356. Tisdell, C. A.. “Public finance and gains from international tourists: Some theory with ASEAN and

Australian illustrations,” Singapore Economic Review, Vol. 2X (1983), pp. 3-20. World Tourism Organization, Yearbook of‘ Tourisl Slafisfics (Madrid: WTO, various years). World Tourism Organization, Economic Review of World Tourism: Tourism in the Contexr of Economic Crisis and ihe Dominance of the Service Economy (Madrid: WTO, 1988). World Tourism Organization, Economic Revrew of World Tourism (Madrid: WTO. 1986).