Government Revenues Attributable to Tourism Conrad Barber-Dueck, Statistics Canada The Seventh International Forum of Tourism Statistics Stockholm, Sweden June 10, 2004

Outline Introduction History and Aim of Study Scope of Study Concepts Methodology Results Conclusion

Why Measure Government Revenue from Tourism? From the TSA, GDP and employment data can be obtained Government revenue data not available directly from the TSA Government revenues from tourism are important to policy makers and for government funding of tourism

The Canadian Experience Completed a second study on government revenues This second study updates and expands upon earlier study done for the year Current study using 1998 as reference year, the most recent TSA in Canada

Aim of Study To answer the following questions: How much does each level of government collect from tourism (federal, provincial and municipal)? From what sources (tax or non-tax) is this revenue generated? What commodities and industries contribute the most revenue?

Scope of Study The study expands the scope of the revenues considered to include all tax and non-tax sources of government revenue In the end, 86% of all sources were covered (initial study covered 55% of all sources of revenue) Exclusions, such as other current transfers, have little tourism impact

Sources of Government Revenue in Canada

Coverage of Government Revenue

Concepts Only revenues directly attributable to tourism are included Includes taxes on sales of goods and services sold directly to visitors and taxes on income generated by the production of these goods and services Includes sales of goods and services by government sold directly to tourists

Based on TSA/SNA Concepts Taxes were on a National Accounts (accrual) basis Expenditures taken from the Canadian TSA

Data Sources Input-Output system has tax data by commodity and industry Some tax data received from Canadian Revenue Agency (CRA), the government department responsible for the collection of tax data. Tourism shares of commodities and industries available from the TSA

Methodology Calculate tourism shares for each industry and commodity (from TSA) For example, say the tourism share of accommodation equals 90%. Then 90% of the tax revenue generated by accommodation would be attributable to tourism Calculations of shares done at the most detailed level of 727 commodities and 300 industries

Taxes on Income Based on the industry of origin Employment insurance and contributions to pension plans taken from the economic accounts

Taxes on Corporate Profits Distribution of taxes for corporate profits not available by industry Operating surplus was available by industry Used the distribution of operating profits to allocate taxes from corporate profits Assumes taxes are proportional to operating surplus across industries

Government Sales of Goods and Services Includes the revenue on services bought directly by tourists (eg. camping fees, park fees, recreation and entertainment) “Social transfers” by government not included in TSA or in study Thus, income taxes of those working at a tourism information booth (not paid for by tourists) or working on tourism research is not included in the study

Results: By Source

Results: By Level of Government

Results: Income taxes, taxes on production and contributions to social insurance plans

Results: Taxes on products (final sales)

Conclusions and Further Work The government revenues project provides another important indicator of the importance of tourism in an economy Issues Timeliness needs to be improved Expand to full coverage of all government revenue sources Incorporate a regional dimension