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Antonio Escudero: “It makes sense to let the municipalities delay the implementation of the rate”

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Expert Antonio Escudero offers answers to various doubts about the tourism tax, such as the ideal moment for political discussion, the economic impact the tax will have, the cost and benefit it will deliver, or the relationship between its implementation. deferred and voluntary.

Is now the right time to address the tourist tax debate?

This issue has been talked about for years and it’s possible that two partners of the Valencian Government promoted it after the pandemic because it was an election promise and city councils are free to decide on it for years to come. .

How do you evaluate the economic impact of the implementation of this tax?

The effect of the tax will depend on the price elasticity of tourist demand and we do not know this elasticity as the tax has not yet come into effect. If tourists coming to Alicante have to pay X rate, the price of their stay will be higher, thus decreasing demand. Now, will it drop a little or a lot relative to the price? That’s the elasticity and like I said we don’t know it because the ratio doesn’t exist. But economists have estimated the resilience of where this tax goes into effect to mitigate negative externalities created by tourism, and my expert colleagues in Tourism Economics say that overall, the rate is modest, with the drop in demand largely low. slightly higher in touristic cities and destinations with low cost airlines.

What do you think about the debates of different political groups?

I know of a report by tax advocates and a report by those who criticize it. The first was prepared by professors from the University of Valencia and is based on what happens where the tax is. According to them, demand will decrease somewhat as it is inelastic and higher tax collection will serve to mitigate negative externalities: municipal clean-up costs, environmental improvements, less noise…. Other report by various professors. The University of Alicante and He argue that demand will be very elastic and tourist numbers will drop significantly.

What would be the cost-benefit ratio of the fee?

Warning that I’m not a Tourism Economics major, the rate can be useful because just between 0.5 and one euro per day will moderately reduce demand and still provide a collection to smooth out negative externalities.

What do you think is a deferred and voluntary tax?

Since the effects of the epidemic on tourism have not completely disappeared, I think it makes sense to allow municipalities to postpone the tax application. war. from Ukraine. As for volunteering, as far as I know, there are already two council taxes of this nature.

Source: Informacion

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