Impact of international tourism receipts on public revenue in developed and developing countries

Purpose This paper aims to investigate empirically how international tourism receipts influence public revenue, in particular non-resource revenue. Design/methodology/approach The analysis relies on an unbalanced panel of 156 countries (including both developed and developing countries) over the period 1995-2015. The empirical analysis uses the two-step system generalized methods of moments estimator. Findings The empirical results show that international tourism receipts exert a positive and significant impact on non-resource tax revenue. In addition, this effect increases as countries' development levels rise, which signifies that in terms of non-resource tax revenue, an increase in international tourism receipts benefit much more to advanced economies than to less advanced economies. Research limitations/implications These findings call for governments notably in developing countries to develop the tourism sector and concurrently to strengthen tax administrations (and possibly design appropriate tax policy for the tourism sector) to derive the full advantage in terms of public revenue from the rise in international tourism receipts. Practical implications The analysis highlights the importance of international tourism receipts for public revenue. This would help scholars and policymakers have a clearer view, at least in terms of magnitude, on the impact of international tourism receipts on non-resource tax revenue. Originality/value To the best of the author’s knowledge, this is first the study that investigates this topic.