Economic Impacts of a Carbon Tax on the Australian Tourism Industry

The article assesses the potential economic effects on the Australian tourism industry from the introduction of a carbon tax introduced July 1, 2012. The tax is projected to lead to changes in key macroeconomic variables, reducing growth in real GDP, real consumption, and employment. Most tourism industries in Australia will experience a small but significant contraction in output relative to projected baseline values over the period to 2020 in line with a reduction in growth for the economy as a whole. A slightly larger reduction in tourism employment, relative to that of other Australian industries, is projected for the period. The largest falls occur in the Accommodation; Air and water transport; and the Cafes, restaurants and food outlets industries. Since direction of impacts on the tourism industry can be expected to be similar for any pricing scheme to reduce carbon emissions, the analysis has implications for tourism policy globally.