Finally, administrative arguments should be specially considered in this case.
On the one hand, raising VAT rates has the important advantage of minimum administrative
and compliance costs 1 (in contrast to a new specific tourist tax).
On the other hand, the usefulness of VAT as a scheme to tax tourism would be reduced
when the level of government that raises it differs from the territory in which tourism problems and concerns arise.
In a small tourist country, VAT and tourism problems will be both nationwide,
so raising VAT rates on tourist goods and services would be equivalent to a specific tourism tax.
But when tourism problems are found in specific regions (as in many countries),
only differential regional taxation could tackle the problems associated to tourism.
Thus if VAT is a central tax, it will not be an accurate instrument
(since its effects will overflow the tourist regions and probably have
negative effects in the economy as a whole),
although this could be solved if VAT regulation allows for regional differentiation.
Therefore, the use of VAT as an alternative of specific tourism taxes
will strongly depend on the regulatory field, as we will see in the next section.