Tourism VAT relief: a behavioural cost-benefit analysis with off-peak targeting

What is it about?

Tourism activity changes sharply across seasons, creating challenges for destinations with strong winter slowdowns. One proposed solution is to reduce VAT on tourism services to stimulate demand. Using ten years of data from Dorset UK, we show that seasonal VAT cuts generate stronger economic benefits per pound of cost than full-year reductions. Seasonal cuts raise visitor spending and support jobs when businesses have spare capacity, while full-year cuts remain far more expensive for the government.

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