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Macroeconomic Effects Of A Vat Reduction In The Italian Hotels & Restaurants Industry

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  • Mara Manente
  • Michele Zanette
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    Abstract

    The paper tests the effects on the Italian economy of a fiscal measure aimed at lowering the VAT rate from 10% to 5% in the Italian 'Hotels and Restaurants' sector. The analysis focuses first on the impacts in terms of tourism consumption, investments of the sector and public budget. Thereafter, by means of a multiregional-multisectoral input-output model, the increase on the total employment levels by sector and by region has been estimated. Based on a tourism demand elasticity of -1.06 and a supply elasticity of 2.0, tourist nights would increase by a maximum of 3.15% and total tourism consumption by 4.4%, while gross fixed investments by the sector would increase by 2.17%. As for the budget constraint, we have calculated the final 'cost' of the fiscal measure for the Treasury. Concerning the macroeconomic effects in terms of employment, the fiscal measure would produce a total increase of almost 100,000 jobs (expressed in fulltime equivalents).

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    File URL: http://www.tandfonline.com/doi/abs/10.1080/09535314.2010.526927
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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Economic Systems Research.

    Volume (Year): 22 (2010)
    Issue (Month): 4 ()
    Pages: 407-425

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    Handle: RePEc:taf:ecsysr:v:22:y:2010:i:4:p:407-425

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    Web page: http://www.tandfonline.com/CESR20

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    Related research

    Keywords: Tourism policy; Tax policy; Value Added Tax; Input-output model;

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    Cited by:
    1. Rakela Thano, 2013. "Touristic Investments in Saranda Region," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 3(2), pages 9, April.

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