Specifics of the Tax System to Support Tourism before and during the COVID-19 Pandemic: Evidence from South American Countries

Shirley Consuelo Honajzrová Banús,T Kliestik

doi:10.1051/shsconf/20219201016

Shirley Consuelo Honajzrová Banús, T Kliestik

Open Access

https://doi.org/10.1051/shsconf/20219201016

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Abstract

Research background:Following the global trends concerning “tourism taxation,” South American governments identified and applied policies on taxation to raise revenues or fiscal relaxation measures to support their tourism sectors as strategies to increase its number of tourists, competitiveness, and the attractiveness of its destinations. Due to the COVID-19 threat, several countries have been forced to turn to emergency tax breaks and temporary changes in taxation measures.Purpose of the article:This research aims to determine which taxes, fees, and charges that affect the tourism sector in South American countries have been reduced/removed as a short-term measure to support tourism during the COVID-19 crisis.Methods:The paper is structured from deductive reasoning, which moves from a general to a more specific analysis. First, a basic description of the tax system’s specifications that affect South America’s tourism sector is presented based on comparative information in the form of an inventory of tourism-related taxes, based on an analytical study. With data obtained from the United Nations World Tourism Organization (UNWTO) and other international organizations which are tracking the policies’ responses to COVID-19, an assessment of the key policy responses from these countries related to “tourism taxation” will be made and compared with other regions.Findings & Value added:The contribution presented focuses on exploring and describing the role of taxes used as a measure to support the tourism sector. Then, the tax incentives/reduction or removal made as a government response to the coronavirus pandemic threat and its possible impacts were analyzed. It also highlights recent trends and interesting practices in South America.

Highlights

For the countries of South America, tourism has the potential to be an engine of socioeconomic development
If we look at other regions such as Europe, the Covid-19 outbreak was a hard blow for tourism, and this is how the "Marshall Plan" emerged to save the tourism sector
Based on the information collected in South America and following the global trend of raising monetary resources to promote tourism, it has been identified that the central taxes and fees that affect or benefit tourists are the boarding fees at airports, the tourist tax applied to lodgings, and the TAX-FREE or VAT refund in accommodation and shopping

Summary

Introduction

For the countries of South America, tourism has the potential to be an engine of socioeconomic development. The coronavirus (COVID-19) global pandemic has brought significant impacts in terms of tourism, in this sub-region of Latin America and globally. Between 2016 and early 2020, international tourist arrivals grew at around 10% per year in Mexico and the three subregions (Caribbean, Central America, South America). In some South American countries such as Argentina, Brazil, Chile, and Peru, the tourism sector depends on national visitors, representing a proportion more significant than 50%. As the pandemic reached the region and an increasing number of countries closed their borders in March, these arrivals declined by more than 50% in March and close to 100% in April in all three subregions and Mexico. As the pandemic reached the region and an increasing number of countries closed their borders in March, these arrivals declined by more than 50% in March and close to 100% in April in all three subregions and Mexico. [3] This caused international and national flights to decrease to almost zero

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