The Economics of Casino Taxation
AbstractIn this paper, a model of the costs of a casino is developed that focuses on the implications for economic welfare of different taxation schemes for casinos. The situation being considered is in a country where casinos cater exclusively to foreign tourists. The goal of the country is to determine the maximum amount of taxes that can be extracted from the activities of this sector under different systems of taxation. When the price of gambling is set by regulation above its competitive level, the economic losses created by excessive investment in the sector can be reduced by taxation. A turnover tax on the amount gambled can maximize both tax revenue and the economic welfare of the country. Due administrative constraints, a number of countries rely on the taxation of the casinos’ fixed assets or a combination of a turnover tax and a tax on fixed costs. The model is applied to the situation in North Cyprus. The annual economic efficiency loss from its poorly designed tax policies on casino gambling is estimated to be about 0.5 percent of GDP.
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Bibliographic InfoPaper provided by Queen's University, Department of Economics in its series Working Papers with number 1057.
Length: 29 pages
Date of creation: Apr 2006
Date of revision:
Publication status: Published in Applied Economics, April 8, 2006
Casino; taxation; gambling; tourism; economic benefit;
Other versions of this item:
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
- H27 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other Sources of Revenue
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-04-29 (All new papers)
- NEP-PBE-2006-04-29 (Public Economics)
- NEP-PUB-2006-04-29 (Public Finance)
- NEP-TUR-2006-04-29 (Tourism Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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