Foreword

The Travel & Tourism industry incurs more arbitrary taxes, user fees and add-on charges than any other industry worldwide. Arguably Travel & Tourism is the only taxed export and its customers are the only taxed non-voters. This report sheds light on just how ill-conceived tax regulation leads to lost output, lost growth and lost jobs.

This is the first report produced by the World Travel & Tourism Council’s newly founded Tax Policy Center at Michigan State University.  The Center’s staff will continually monitor the status of national, state and local taxes on the Travel & Tourism industry and inform government and industry officials of their impact where they may be deemed unreasonable or discriminatory.  This report has been sponsored by the American Express Company.

In our intention to use the Tax Policy Center and its research to advance responsible taxation of the Travel & Tourism industry for the good of our national and global economies and for the future of our industry and its shareholders.
 

Preface

In order to understand Travel & Tourism, the policymaker must undergo a basic paradigm shift.  A paradigm shift is required, because commerce in Travel & Tourism is unlike that of most conventional markets.

In conventional markets, consumers are fixed and products are mobile.  In Travel & Tourism markets, consumers are mobile and the products are fixed.  Policies relating to Travel & Tourism often fail to reflect that it is a competitive exporting industry.  In most cases, the revenues of exports are recaptured when products are shipped outside destinations.  In Travel & Tourism, export revenues are captures when travelers arrive at the destination.

In most markets, if a consumer chooses one brand or product over another, a sale still takes place.  In Travel & Tourism, if a consumer chooses one brand or product over another, the sale takes place, but in another location.  Policies relating to Travel & Tourism often fail to reflect that consumers have a myriad of product (i.e. destination) choices, and price (including taxes) is a major consideration.

Resident taxpayers vote via ballot.  Tourists “vote” with their dollars, pounds, francs or yen.  As negative tourism “votes” are registered, resident jobs are lost and local businesses suffer.  Such residents can be expected to demonstrate, via the ballot, their dissatisfaction with tax policies that threaten their livelihood.  Thus, while shifting the tax burden to tourists may be expedient politics, it does not guarantee political safety.

Sound tax policy in Travel & Tourism is based on understanding these unique characteristics.

To this end, the World Travel & Tourism Tax Policy Center will endeavor to provide authentic new knowledge that will create the basis for informed decision making, fueling the development of sound Travel & Tourism tax policy and bringing about a shift in the current Travel & Tourism tax policy paradigm.
 

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