Impact of Direct and Indirect Taxes on Consumers and Tourism Industry

Abstract

This research seeks to check the affect of tourist taxes on the behaviors of holidaymakers. The majority of the research conducted so far has focused on the effects of tourist fees on the demand curve and consumers' willingness to pay. Air passenger duties have also been included while assessing outbound tourism. Numerous studies provide different arguments in favor of and against the use of tourism taxes, therefore more investigation into the correlation between the two is necessary at both the miniature and broad levels. The impact of tourist taxes on domestic tourism expenditure choices varies among locations of Pakistan, according to this thesis. Also, the impact of tourist taxes is reduced by certain household sociodemographic factors. In order to assess the extent to which Pakistanis participate in and spend money on domestic tourism, this study combines questionnaire responses from the Subcontinent Council Stats Directorate on household budgets with macroeconomic indicators from the World Bank Growth Indicator. According to the data, foreign visitors are discouraged by tourism taxes. In order to determine how tourist taxes affect Pakistan's economy, this research compiles statistics from the Pakistani Ministry of Tourism, the United Nations World Tourism Organization, and the World Bank.While higher tourist tax rates may deter some visitors from taking part in domestic tourism events, they may also encourage more household spending on vacations. The tourist tax has a disproportionately detrimental effect on families headed by women and children. Spending on domestic tourism declines when tourist tax rises for single-person households. In tiny Greenland economies that rely on tourism, tax policies have an immediate impact on the number of foreign visitors. Although Pakistan's inbound tourist demand is mostly unaffected by adjustments to tourism tax income, visitors from ten source economies are willing to pay a premium regardless of the ripple effect. Advertisers in the tourist industry would do well to concentrate their efforts on certain demographics and broaden their customer base.