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KEY FACTS AND FIGURES BY
UNWTO SECRETARY GENERAL
Tourism taxation should be carefully measured,
modelled, monitored and assessed before any
political tax reform is implemented.
Taleb Rifai
We are living in an era of travel. The tourism sector enjoyed its seventh consecutive year of above-average growth in
2016 as the number of international tourists, which back in 1950 numbered just 25 million, surpassed 1.2 billion. All
around the globe, millions travel within their own countries and across borders and there is almost nowhere in the world
that is not travelled to.
Today the sector contributes 10% of the world’s GDP and as many as one in every eleven jobs globally. Exports from
international tourism have swelled from only U$2 billion in 1950 to U$1.5 trillion in 2015. This equates to 7% in global
trade, a larger contribution than from any other export sector except fuels and chemicals. In Europe tourism has been
instrumental in supporting economic recovery and the generation of new jobs.
Beyond the direct impact, tourism reaches into many other sectors, such as construction, manufacturing and IT services,
having a multiplier effect along the value chain. Tourism is creating jobs for millions at a time when the failure to provide
hope for a better future to people of all regions is one of our biggest global challenges. It is estimated that every job in
the tourism sector creates about 1.5 additional or indirect jobs in the tourism-related economy. The sector’s wide reach
also stimulates entrepreneurship and growth of micro, small and medium-sized enterprises (MSMEs). MSMEs are the
sector’s main innovators and sources of economic diversification, as well as being major job creators across sectors.
Yet, tourism’s role in employment generation and entrepreneurship is often underestimated and undervalued in policy
formulation and implementation. This includes the forming, or reforming, of tourism taxation systems and the analysis
of its impacts in terms of job creation. A good taxation system needs to be equitable to reduce tax avoidance, and
efficient without affecting the allocation of resources. A tourism tax regime that is sound, transparent and efficient can
support good investments to assist a country’s development in socio-cultural and political terms, as well as in economic
competitiveness and employment. The better designed and more holistic the tourism taxation policy is, the more the
environmental, socio-cultural and economic benefits – and the fewer the costs – generated for hosts.
There is no single approach for sustainable and competitive tourism taxation in the long-term. Destinations differ in
their stages of tourism development, political and legal systems and institutions, and overall development priorities.
Their idiosyncrasies have to be carefully and effectively measured, and their measurements analysed holistically, when
establishing or reforming taxation policies. A holistic system and an optimal taxation policy in tourism development
should account for tourism’s role within the larger economy, its economic, environmental and socio-cultural benefits as
well as its potential costs.
Therefore, tourism taxation should be carefully measured, modelled, monitored and assessed before any political tax
reform is implemented. Applying models that provide strong evidence for decision-makers at any given destination is
the most reliable and feasible option in attaining sustainable, resilient and competitive tourism and overall development.
We much welcome this report by HOTREC as we trust it will provide an important contribution to the ongoing discussion
on taxation and its impact on competitiveness in the tourism sector, and particularly to the pressing and ongoing
challenge of job creation. I would like to thank HOTREC for its continuous contribution to advancing tourism knowledge
and maintaining Europe’s position as the world’s leading tourism region and global shepherd of a more sustainable and
competitive sector.
HOTREC - Report on the benefits of low VAT on job creation and competitiveness in the European Union
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