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Taxing tourists is better than taxing locals and worse than taxing nobody.
is it?
In any isolated setting, sure, and especially for a place like Iceland (400k people, 2 mil visitors every year). Tax each visitor a little and it adds up to a lot.
but everyone's a visitor and local somewhere. Isn't this an unstable eq/inferior Nash equilibrium of some sort?
It's also about incidence. If you subscribe to the notion that local governments are meant to serve local people, and that tax incidence will be shared between both the consumers and producers... then the tourist tax at least places more of the incidence on outsiders for whom the local government has no obligation towards.
TARIFFS to protect against outsiders!! We don't need those folk over here
I have also argued that tariffs are less bad than other taxes.
I knoooow, on the margin anyway.
You've been quiet about that in recent months. Argument fallen out of favor...?
It's not hot anymore. I regret nothing.
Or tourists become an elevated class because they bring the money. I’ve been to some 3rd world countries like that.
Tourists tend to be those with more disposable income, so there’s a natural progressivity to it.
It also fits the criteria that the best taxes are the most avoidable. What’s more avoidable than traveling to another part of the world?
My first thought too...
This whole article is kinda like econ-ception ("we have to go deeper!") because it starts by exactly going one level deeper and asking how those tourist tax dollars might otherwise have been spent, but then it fails to go two levels deeper by asking how those tax dollars might otherwise have been raised
It’s probably not a terrible assumption that these are almost entirely additional taxes, but sometimes localities really do deliberate over which new revenue source to add.
In those cases, you may reasonably answer “None of the above, please. Failing that, tax the tourists.”
I agree that they tend to be additional new taxes, but they could delay the imposition of new taxes, next time the city is in a budget crisis
And yeah, I hate tourists, so imma vote for a tourist tax out of spite either way
next up: boomer tax!
The “compared to what?” is strong with this issue.
Taxing tourists is better than taxing locals and worse than taxing nobody.