Tax bonanza for local government

The Balearic government tax office collected 15'7 per cent more taxes last year than in 1999 and the government says that, despite the year 2000 marking the end of the region's cycle of economic growth, all indications point towards another year of healthy tax returns. Last year the government collected a total of 43'936 million pesetas in taxes, slightly higher than the estimated 41'316 million pesetas and much higher than the total 37'965 million collected in 1999. Just over 50 per cent of taxes were capital gains taxes on property deals or taxes paid on the purchase of second hand cars. But while the tax office has confirmed that the number of tax returns was slightly higher last year than expected, not all of the money raised from taxes in the Balearics will be stored in the Balearic government's war chest for re-investment in the islands. A battle is raging between Palma and Madrid over the return of taxes and one of the reasons the Balearic government claims that it has to introduced the controversial tourist tax is that central government is not releasing sufficient funds for the protection and management of the environment. The Partido Popular (conservatives) and the leader of the Insular Council of Majorca, Maria Antonia Munar, (Majorcan Unionists) have both said that the alternative solution to the tourist tax is to secure a better return on Balearic taxes from Madrid, but the Balearic government does not appear to gaining much ground in central government. It was the lack of central government funding which topped the agenda at this week's Catalan summit in Palma with the Balearic leader, Francesc Antich and his Catalan counterpart, Jordi Pujol, joining forces in a united front to try and secure extra funds from central government coffers. Both regions, two of the wealthiest in Spain and highest tax payers, believe they are under funded and sold short on tax returns by Madrid. The Balearic government is hoping that Madrid will increase funding at least in relation to the increase in tax returns. In the meantime, the Balearic Treasury is devising a scheme which would involve foreign holiday home owners paying taxes in the Balearics. A financial study carried out last year concluded that while natural resources and the island's infrastructure are being put under strain by millions of people each year, not all home owners in the Balearics are paying taxes locally.