Article Analysis #2

“Edinburgh tourist tax could be £2 per room, per night.”

To effectively address the impact of the increasing levels of tourism, the Edinburgh City

Council has devised a plan to introduce a £2 a night per room tourism tax. Beyond Edinburgh,

levying a tourist tax has been practiced across countries with relatively prosperous tourism

industry. The news article reports the tax to yield an additional £11 million, in addition to the

publication of detail accounting for the city council's proposals concerning a Transient Visitor

Levy. Such publication was released before their plans — of which was projected to endure a

year's duration. Moreover, local authorities also recommended an annual cost of 2% for all forms

of accommodation.

While some have argued its potentiality to increase the governments' revenue and

improve infrastructure, opponents believe it futile to implement a tourist tax that may depress

prospective visitors. Understanding this case can considerably draw from our learned knowledge

of the market forces of supply and demand. This

economic theory's relevance can allow us to

construct a simple supply and demand model to

demonstrate a better comprehension of the potential

outcomes. First, we can assume that enforcing a

tourist tax may reduce the demand for tourism in

the short-term. My application of the supply and

demand model regards data of hotel prices taken

from a Booking website, highlighting the short-term

outcome of the government's tourist tax. The

quantity demanded for tourism declines at every possible price with respect to the Law Of

GEOLOGY 101 REPORT 1

Demand. Given that the tourist tax is not a monetary factor, the demand curve shifts to the left

from D to D1. Consequently, tourism demand will indirectly cause a decline in the supply of

tourism. This is visualized through a left shift of the supply curve from S to S1. The results of

these shifts raises P* but reduces the Q*. Given that tourism is a leisure activity, tourism demand

can be considered relatively elastic, with foreign holidays likely to increase price elasticity. As

such, the decline of tourists may be an initial drastic outcome — but it can be mediated by the

indirect impact of a reduction in the supply for tourism. Considering that the news article is more

focused on a long-term situation, the influence of future inflation will render the £2 cost

worthless — all else equal. Thus, the number of tourists will likely return to the usual standard.

To the government, 'It is said the tax would raise an extra 11m a year,' enforcing the tourist tax

can likely raise their total revenue. The money attained can be reinvested into tourism,

strengthening infrastructure and accelerating the service industry. In this case, the tourism tax

would generate positive externalities and thereby, increase tourism demand to an extent.

Conversely, the supply for tourism would rise. The public opinion poll demonstrating the

policy's rationality revealed most interviewed tourists in favor of this plan. As a result, the

consumer surplus would not face a substantial decline. Levying on tourist tax appears to be

harmful to the government in the short-term. Still, tourists can enjoy a quality travel experience

at a fair price in the long-term. The tax would likely be utilized for quality improvement and

would not take up a substantial amount from consumers' total cost of spending on tourism.

However, such satisfaction is based on a prerequisite that demands the tax enforced to provide a

better tourism service for consumers. Ultimately, the tourism tax would not be rational or

efficient if the government did not handle it adequately. 

SOURCE: https://www.bbc.com/news/uk-scotland-edinburgh-east-fife-45643915

GEOLOGY 101 REPORT 2

GEOLOGY 101 REPORT 3