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Free Content A general equilibrium analysis of casino taxation in Portugal

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In Portugal, casinos are taxed at a 50% rate and the tax receipts are allocated to Turismo de Portugal, which can use it in different ways – subsidizing tourism firms, advertising and so on. A recent study shows that casino demand in Portugal is originated predominantly in the domestic market. There is a debate about (i) the level of the tax levied on casinos and (ii) how the tax receipts should be used, as tourists rarely visit casinos. The paper contributes to this debate. The authors develop a dynamic general equilibrium model of a small open economy, comprising an industrial sector producing an internationally traded good, a tourism sector producing tourism services offered to both foreign tourists and residents and a casino sector supplying gambling services. Domestic residents derive utility from consuming the traded good, tourism services and gambling. The model is calibrated to the Portuguese economy. Using numerical simulations, the authors discuss the welfare effects of abandoning the taxation of casinos, as well as of different uses of casino tax receipts.


Document Type: Research Article


Publication date: June 1, 2012

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  • Tourism Economics, published bimonthly, is a peer-reviewed journal devoted to the economics and finance of tourism worldwide. Articles address the components of the tourism product (accommodation; restaurants; merchandizing; attractions; transport; entertainment; tourist activities); and the economic organization of tourism at micro and macro levels (market structure; role of public/private sectors; community interests; strategic planning; marketing; finance; economic development).

    Fast Track. Tourism Economics Fast Track papers have been peer-reviewed, revised and fully accepted for publication. However, although these are the final versions from the authors, they are unedited manuscripts and will undergo a rigorous editing process before their appearance in an issue of the journal. This means that the Fast Track manuscripts may not conform to journal style in terms of presentation, spelling and other usages. They may also contain errors of typography, grammar, spelling, referencing, etc, all of which will be corrected in the processes of copy-editing and proofreading.
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