Tourism taxation: Good or bad for cities?

This chapter provides an overview of tourism taxation and explores the extent to which a tourism tax on overnight stays has an impact on domestic and interna-tional tourism demand. The analysis employs a policy evaluation technique, the synthetic control method (SCM) developed by Abadie and Gardeazabal (2003), which has rarely been employed within the tourism sector. As a case study, three well-known Italian cities are considered, including Rome, Florence, and Padua. The effects exerted by the policy intervention on tourism flows are evaluated on a panel of cities considering the time span from 2008 up to 2014. In line with other studies, overall, the SCM and the placebo analyses show that the public in-tervention on tourism demand, evaluated with three different indicators of tourist overnight stays, arrivals, and average length of stay, has not had a specific effect.