Intervention analysis with cointegrated time series: the case of the Hawaii hotel room tax

Bonham, Carl; Gangnes, Byron

doi:10.1080/000368496327831

Cited by 56 publications

(36 citation statements)

References 31 publications

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“…A similar conclusion was obtained by Mak (1981); Bonham and Gangnes (1996) which finds no statistically significant impact of the room tax on room revenues. According to the authors since the tax is added to room bills on checkout it may not be visible to the tourist when planning a vacation.…”

Section: Resultssupporting

confidence: 69%

Tax Exportability in Tourism Market

Mohebi¹,

Rahim²,

Lee³

et al. 2011

American Journal of Economics and Business Administration

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Problem statement: Tax incidence is a basic topic in public economics as the tourism industry is an increasingly major contributor to government revenue. Generally, government taxation objectives are for the purpose of financing programs that improve people's lives and economic prosperity, accelerate economic growth and allow for access to sustainable development. In the first view, tax policy decisions by government are based on their effects on the distribution of economic welfare. Therefore, to provide incentives for governments to select a suitable tax policy, exportability of tax is important. Hotel room tax is one of the main parts of tourism tax. Despite the importance of tax for government, it seems that the exportability of hotel room tax is still not well known. Therefore, understanding the counteraction of foreign visitors with respect to its main factors is important for the Malaysian government and tourism management. To achieve these aims, this study examines tax incidence effects on the tourism market. Approach: We use hotel room as representative of tourism market. Quarterly data from 1995-2009 are used and a dynamic model of simultaneous equation is employed. Results: Our results indicate that in the short run supply is elastic and demand is inelastic.But in the long run both demand and supply are elastic to price. Conclusion: Based the results if the government imposes one ringgit (Malaysian currency) tax on hotel room price, the tourist contribution is more than 89 and 74% in the short run and long run respectively. Hence, we conclude that the Malaysian tourism market is exportable. Our results also indicate that tax on hotel has no negative social effects in the short run.

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Section: Resultssupporting

confidence: 69%

Tax Exportability in Tourism Market

Mohebi¹,

Rahim²,

Lee³

et al. 2011

American Journal of Economics and Business Administration

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“…However, a later study using panel data until 2003 to analyze tourism demand to the Balearic Islands, did not find a significant effect of the ecotax on the number of arrivals (Garín-Muñoz and Montero-Martín, 2007). Other studies analyzing the impact of the 5% Hawaii hotel room tax (which generated in $82 million of revenue in 1990, making it the third largest source of state revenue) did not find a statistically significant impact on visitors (Bonham and Gangnes, 1996). Thus, if the number of tourists is not greatly influenced by the ecotax and the amount that can be raised per tourist is not completely crowded-out by the ecotax, then such a policy may prove a valid way to raise funds for environmental protection and remediation.…”

Section: Discussion Of Resultsmentioning

confidence: 99%

“…Taxes in tourism (not only environmental taxes) are very appealing for public agencies, since they shift a portion of the local tax burden from residents to tourists (who are not voters in the region), without imposing a substantial negative burden on the local tourism industry (Bonham and Gangnes, 1996). Other fundraising mechanisms such as voluntary donations (e.g.…”

Section: Introductionmentioning

confidence: 99%

An Experimental Study for Environmental Fundraising in Majorca, Spain

López¹,

Blanco²,

Coleman³

2011

Experiments on Energy, the Environment, and Sustainability

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This paper tests the effectiveness of different institutions to fundraise for environmental projects at tourist destinations. We conduct a series of experiments with tourists visiting the Island of Majorca, Spain, and test the fundraising capacity of a voluntary donation scheme, two tax levels, and a matching instrument. Majorca is a major international tourism destination, but tourism activities continue to stress the natural environment making the destination less attractive. This is a common phenomenon in mature tourism destinations. In response, many destinations invest in projects to prevent environmental degradation or for environmental remediation. These projects are traditionally financed by means of public investment, with a consequent tax burden to residents. The most common alternative to fund environmental projects is shifting the tax burden to tourists through tourist-targeted taxation schemes. More recently, programs to gather voluntary donations from tourists have been implemented. In one treatment of our experiment, tourists are given the opportunity to make a voluntary donation to the local environmental organization involved in such projects. In high tax and low tax treatment, tourists are taxed some proportion of their initial endowment and then decide on their level of voluntary contributions from their remaining endowment. In a final treatment, the experimenters match, one-for-one, any voluntary donations. We test the crowding-out hypothesis of taxes over voluntary environmental donations and find imperfect crowding-out (from 60 to 65 percent for different tax levels). Finally, we explore potential crowding-in of matching instruments (widely used in non-tourism settings for fundraising campaigns), but do not find any support for the capacity of matching contributions to increase the level of donations. Because of imperfect crowding-out it may be reasonable to use voluntary donation programs and tourism taxes complementarily (instead of independently, as has been done in Majorca), to increase fundraising for environmental purposes.

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“…Given that its purpose was not to internalize negative external costs to the environment, it cannot be considered as an environmental tax. 6 The study included 14 origin countries: United Kingdom, Germany, France, Italy, Portugal, Norway, Belgium, Ireland, Netherlands, Denmark, Austria, Sweden, Switzerland and Finland. hotel room tax (which generated in $82 million of revenue in 1990, making it the third largest source of state revenue) which did not find a statistically significant impact on visitors (Bonham and Gangnes, 1996).…”

Section: Introductionmentioning

confidence: 99%

Voting for environmental donations: Experimental evidence from Majorca, Spain

Blanco

López

Coleman

2012

Ecological Economics

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We analyze group-voting on binding minimum contributions to environmental projects and assess how such institutions affect subsequent voluntary donations. Mature tourism destinations such as the island of Majorca (Spain) suffer environmental pressures caused by decades of intense tourism development, reducing the environmental quality and tourism appeal of the island. Financed from the local tax base, public administrations have developed costly projects to mitigate this degradation. Alternative fundraising policies applied in recent years include a tax to the tourism industry and more recently voluntary donations by tourists. In this paper we explore the fundraising possibilities of applying taxes and voluntary donations complementarily by using an economic field experiment with international tourists. Participants were allowed to vote to apply a minimum compulsory donation in addition to which they could make a voluntary donation. Our results show that participants only self-impose mandatory contributions when they must choose between a high or low tax, passing in some cases the high tax. In addition, we find that neither the act of voting nor the fact that a vote is actually passed changes voluntary contributions. Therefore, consistent with previous experimental literature addressing international tourists behavior, our data does not support a crowding-out of voluntary donations by the application of tourism taxes ear-marked for environmental purposes. From a policy perspective, this result supports the potential for a complementary use of taxes and voluntary donations for fundraising environmental projects in tourism destinations.

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Intervention analysis with cointegrated time series: the case of the Hawaii hotel room tax

Cited by 56 publications

References 31 publications

Tax Exportability in Tourism Market

Tax Exportability in Tourism Market

An Experimental Study for Environmental Fundraising in Majorca, Spain

Voting for environmental donations: Experimental evidence from Majorca, Spain

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