1. Tourism economics in the EU member states Taxation system, statistics, powers of local authorities Workshop on European experience in sustainable tourism in coastal areas Dr. Frederic Thomas University of Nice Sophia-Antipolis Simferopol, 14-15 November 2011 Workshop on European experience in sustainable tourism in coastal areas

2. Tourism economics in the EU member states Statistics (1) Tourism is a key driving force of the economy in European Union Workshop on European experience in sustainable tourism in coastal areas More than 5% of the total EU GDP More than 1.8 million enterprises Providing employment to more than 5.2% of the total labor force in European Union Generating more than 9.7 million jobs in European Union

3. Tourism economics in the EU member states Statistics (2) 44% of international tourism receipts in 2010 (306 billion of Euros) 51% of international arrivals in 2010 (476 million) Europe represents 6 out of the top 10 destinations in the world (arrivals and receipts) Workshop on European experience in sustainable tourism in coastal areas Europe, the world's No 1 tourist destination

4. Tourism economics in the EU member states Statistics (3) RankCountry International tourist arrivals 1 France 76.80 million 2 United States 59.75 million 3 China 55.67 million 4 Spain 52.68 million 5 Italy 43.63 million 6 United Kingdom 28.13 million 7 Turkey 27.00 million 8 Germany 26.88 million 9 Malaysia 24.58 million 10 Mexico 22.40 million Workshop on European experience in sustainable tourism in coastal areas RankCountry International Tourism receipts 1 United States $103.5 billion 2 Spain $52.5 billion 3 France $46.3 billion 4 China $45.8 billion 5 Italy $38.8 billion 6 Germany $34.7 billion 7 United Kingdom $30.4 billion 8 Australia $30.1 billion 9 Hong Kong (China)Hong KongChina$23.0 billion 10 Turkey $20.8 billion 2010

5. Tourism economics in the EU member states Statistics (4) Workshop on European experience in sustainable tourism in coastal areas

6. Tourism economics in the EU member states Statistics (5) Workshop on European experience in sustainable tourism in coastal areas Europe’s market share has declined from 80% to 76% over the past decade. Strong euro making Europe a relatively expensive destination for international travellers Development of destinations and increased accessibility to destinations outside Europe.

7. Tourism economics in the EU member states Statistics (6) Workshop on European experience in sustainable tourism in coastal areas Not all destinations in Europe have experienced market share decline over the last decade.

8. Tourism economics in the EU member states Statistics - Ukraine Workshop on European experience in sustainable tourism in coastal areas International tourist arrivalsInternational tourism receipts (1000)Change (%)Share (%)(US$ million)Share (%) 20082009201009/0810/092010200820092010 Europe485,193461,509476,551-4.93.3100471,797410,932406,251100 Ukraine25,44920,79821,203-18.31.94.45,7683,5763,7880.9 Ukraine has been more impacted in average by the financial crisis

9. Tourism economics in the EU member states Taxes - Objectives Workshop on European experience in sustainable tourism in coastal areas There are two main reasons why governments, either national or local, levy specific taxes or tax rates on the tourism sector.  To allocate to the supply price the external costs imposed on the host community through providing public amenities for tourists.  For purposes of raising revenue NB: There are also reasons for governments, either national or local, to encourage investment through taxes incentives.

10. Tourism economics in the EU member states Taxes - Classification Workshop on European experience in sustainable tourism in coastal areas  Two main categories of tourism taxes  General taxes (import duties, profit and sales tax or value added tax) – they fall on both residents and non residents  Tourism taxes (applies to both supply and demand)

11. Tourism economics in the EU member states Taxes - Classification Workshop on European experience in sustainable tourism in coastal areas Directly charged to touristsCharged to user business Arrivals/Departure Taxes e.g. Visas, Travel permits Transportation taxes e.g. Road taxes Travel Taxes e.g. Air passenger duty, Car rental Tax, Fuel Tax Import Duties on Tourism Inputs Accommodation e.g. Bednight TaxCorporation Tax Expenditure Tax e.g. VAT on restaurant meals Land and property Taxes Environment Tax e.g. Ecotax levied on arrival/departure Environment Tax e.g. Ecotax levied on night take offs/landings by aircraft Examples of tourism taxes

12. Tourism economics in the EU member states Taxes – State sales tax and tourism tax Workshop on European experience in sustainable tourism in coastal areas Tourism tax applies to the gross receipts of:  Hotels and Lodging Establishments  Campgrounds  Motor Vehicle Rentals  Recreational Equipment Rentals  Recreational Services  Spectator Events  Visitor Attractions  Visitor-Intensive Businesses The sales tax, or Value Added Tax (VAT), which ranges from 5.5% to 19.6% is charged on the consumption of products in the European Union Each Member State of the EU may also use a maximum of two reduced rates with a minimum rate of five per cent.

13. Tourism economics in the EU member states Taxes - guidelines Workshop on European experience in sustainable tourism in coastal areas The World Travel and Tourism Council (WTTC) has argued that tax payments by the tourist industry should be made in accordance with the following traditional economic guidelines (Holecek, Forsberg, & Myers, 1994) Effectiveness Equitable Efficient

14. Tourism economics in the EU member states Taxes – Sales tax Workshop on European experience in sustainable tourism in coastal areas Most EU member countries choose to apply a reduced rate of VAT to their tourism industries It gives competitive advantage, particularly to socially beneficial sectors like tourism.

15. Tourism economics in the EU member states Taxes – Sales Tax: EU examples Workshop on European experience in sustainable tourism in coastal areas Study on reduced VAT applied to goods and services in the member states of the European Union (Copenhagen economics – 2007)  Ireland  Isle of Man  Portugal and Spain Ireland Changes in VAT rates from 23% to 10% in 1986 to adjust hem upwards again in 1990 to 12.5% in 1990 Stop of the failing trend in the number of international visitors + Irish holidaymakers began choosing Irish destinations over foreign ones Spain and Portugal Differences in the VAT rate restaurants have been reported to distort competition between Portugal and Spain Portuguese restaurants = 12% Spanish restaurants = 7% + VAT deductions to hospitality services The higher VAT and the tax non-deductibility make Portuguese restaurants more expensive vis-à-vis the Spanish

16. Tourism economics in the EU member states Taxes – Sales Tax: conclusion Workshop on European experience in sustainable tourism in coastal areas Study on reduced VAT applied to goods and services in the member states of the European Union (Copenhagen economics – 2007) Total VAT revenue makes up 20 per cent of all taxation income collected in the EU. The conclusion is that, on equity, fiscal and economic grounds, the case for providing a boost to their economy by reducing the rate of VAT on tourism services is highly compelling.

17. Tourism economics in the EU member states Taxes - Incentives Workshop on European experience in sustainable tourism in coastal areas For the purpose of encouraging investment in new projects and activities to offer tourist facilities, the following tax incentives can be granted to natural persons or companies Incentives Exoneration on import tax Exoneration from warfare Exoneration from tax on capital Exoneration from real property tax NB: In 1957 competition rules were included in the Treaty of RomeTreaty of Rome

18. Tourism economics in the EU member states Power of local authorities Workshop on European experience in sustainable tourism in coastal areas Companies may request both fiscal and non-fiscal incentives. However regulations and incentives are usually applied from a framework laid down at the national level

19. Tourism economics in the EU member states Power of local authorities (1) Workshop on European experience in sustainable tourism in coastal areas Only a local authorities can:  Provide a strategic and operational role in maintaining a high quality physical environment;  Provide links and continuity of policy between the services, such as planning, environmental health and highways, that are essential to a sustainable tourism destination;  Ensure that the needs of the whole destination, including residents, businesses, and the environment, are represented and considered in the management of tourism.

20. Tourism economics in the EU member states Power of local authorities (2) Workshop on European experience in sustainable tourism in coastal areas Power of local Authorities in tourism Providing a high quality physical infrastructure Representing the needs of the destination The catalyst for partnerships Ensuring tourism is a corporate consideration Marketing, promotion and information provision

21. Tourism economics in the EU member states Power of local authorities (2a) Workshop on European experience in sustainable tourism in coastal areas Providing a high quality physical infrastructure Street cleansingStreet lightingAccessibility Parks and gardens Leisure and arts facilities Coastal protection and beach cleanliness Water safety Conservation of the natural environment Preservation of historic buildings Building and planning control Environmental health Public conveniences Footpath maintenance and development Car parks and park and ride schemes SecuritySignage “A high quality environment is important for both residents and visitors”

22. Tourism economics in the EU member states Power of local authorities (2b) Workshop on European experience in sustainable tourism in coastal areas Ensuring tourism is a corporate consideration Continuity of tourism policy across an authority can be achieved by addressing tourism in the following local authority plans:  Local Plan  Unitary Development Plan  Community Plan  Local Transport Plan  Local Cultural Strategy  Local Agenda 21 Plan.

23. Tourism economics in the EU member states Power of local authorities (2c) Workshop on European experience in sustainable tourism in coastal areas Representing the needs of the destination Wider good of an area Commercial considerations it is the role of the local authority to develop a long-term, strategic direction for the destination, bringing together and balancing the needs of different interests.

24. Tourism economics in the EU member states Power of local authorities (2d) Workshop on European experience in sustainable tourism in coastal areas The catalyst for partnerships Partnership is both an obvious and necessary way of working; combining expertise, perspectives and priorities across the public, private and voluntary sectors. Partnerships should be used by councils to identify and address their own local tourism priorities.

25. Tourism economics in the EU member states Power of local authorities (2e) Workshop on European experience in sustainable tourism in coastal areas Marketing, promotion and information provision Effective tourism promotion requires high levels of skill to respond to increasingly sophisticated market needs. Good information provision can generate additional income, longer stays, return business and new visitors.

26. Tourism economics in the EU member states Workshop on European experience in sustainable tourism in coastal areas Thank you thomasfrederic1@gmail.com