Abstract
This article shows that casino taxation may be welfare enhancing for gaming hospitality resorts due to their market power to export local taxes to tourist customers. The price-inelastic tourism demand for casino gambling plays an important role in such power of tax exportation. We use a mathematical programming model to derive a tax threshold, through which a specific tax can be identified to be good or bad for efficiency. The policy implication is that a high tax should be imposed if enough of the tax burden can be shifted to tourists, but a low tax must be offered otherwise. These results are shown to be useful in practice across travel destinations.
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