This study explores the impact on tourism consumption of implementing a carbon tax. Employing a difference-in-differences model for a sample of 117 countries from 1995 to 2019, we find that a carbon tax has a significant negative effect on domestic tourism spending but a weak positive effect on outbound tourism spending. On average, implementing a carbon tax decreases domestic tourism spending by 12 %. In contrast, such an environmental policy increases outbound tourism. Interestingly, when considering the intermediary channels of income and price level, the mechanism analysis shows suggestive evidence that implementing a carbon tax increases the price level, which is then transmitted to decreased domestic tourism consumption but does not affect outbound tourism.