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Why do Governments Marginalise the Benefits of Tourism?

March 22, 2014 Association, Headline News 1 Comment Email Email

Skal International comments : Global tourism represents over 9% of GDP (direct, indirect and induced impact). One in eleven jobs globally is in tourism. Tourism represents 6% of world exports and generates over US$1.3 Trillion dollars annually.

(Source : UNWTO Tourism Highlights 2013)

Yet governments continue to raise taxes and damage this vital industry.

  • The UK’s Air Passenger Duty introduced in 2013 is the world’s highest aviation tax
  • The 2013 US budget cuts to air traffic management threaten safely standards and flight scheduling.

These examples are just the tip of the iceberg and all are additional burdens on an industry that in many cases cannot take much more before seeing drastic reductions in revenue and the resulting detrimental flow on effect to many economies. Why do governments then continue to impede the industry with the introduction of more and more taxes and levies?

Skal International World President, Karine Coulanges, states

“It is timely that governments calculate the real benefit and income streams gained from overseas visitors before imposing yet more taxes and levies to try and bolster their treasury funds.  Even a small increase in charges can see a far greater loss of revenue as a result of tourists voting with their wallets and travelling to other destinations”.

“As the world’s economies see the first shoots of growth and confidence after six years of turmoil it is timely to remember that tourism was one of the only sectors to see growth during that time and like all industries it will continue to need fostering and care to ensure this growth continues and not policies of additional taxation for short term gain.”

Tourist revenue in many countries is in the top five of their total GDP, yet many continue to hinder tourism through unnecessarily long visa application periods; the high cost of visa on arrival systems, as well as increasing airport taxes and border control levies. How would these governments react if tourist numbers fell by 10 – 20% with the resulting downturn in revenue? And what flow on effect would that have to their economy? An example can be seen in the decline in tourists visiting Thailand as a result of the unrest in Bangkok. While not related to this issue it does illustrate the effect a drop in tourism can have on a country’s economy. According to Thailand’s Minister of Tourism, arrivals in the country fell by 1 million visitors in January 2014 as compared to January 2013. The Tourism Council of Thailand estimated the revenue loss as 22.5 billion baht (approximately USD$690 million)

How many countries could absorb losses like that? Remember tourists vote and travel with their wallets and if they perceive the cost and time required to gain visas, plus the cost of additional charges and levies imposed by both central and local governments, are too high, they will reconsider where they travel to.

Currently there is "1 comment" on this Article:

  1. I agree, governments are continuing to see tourism as a cash cow, by increasing taxation, while at the same time reducing their investments to increase tourism to their respective countries.

    Look at Britain as an example of a country where the government has reduced funding to tourism organisations to reduce what was once the world;s leading NTO, the British Tourist Authority, now Visit Britain into a mere sad shadow of its former self and also closer to my heart the Wales Tourist Board, one of the best NTO’s in the world does not even exist, having been absorbed as a tiny and largely ineffective department in the Welsh government, with virtually no funds.

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