Question

Disscus the major difference between the formal and informal sector in tourism

Answer 1

Answer


The major difference between formal and informal sector in tourism or as in any other industry is that the formal sector pays tax while an informal sector does not pay tax.

Tourism is a vast industry and it comprises of many formal and informal industries and individuals.

Example, a licensed guide is part of the formal sector while an unlicensed guide is a part of the informal sector.A registered restaurant that encompasses all jobs with normal hours, pays regular wages and pays tax properly is part of a formal sector. While an unregistered restaurant or a roadside vendor who does not pay tax is part of the informal sector.Similarly, street sellers, craft markets, taxi drivers, tour operators, lodging service providers who have not registered legally to offer the services are part of the informal sector.The formal sector comprises of registered Food and Beverages (F&B), lodging, transportation,  and such likes which pays taxes regularly for the services offered.