Staff Reporter

PALMA
BALEARIC hoteliers still owe 28.6 million euros in tourist tax to the Balearic Government, in spite of it being abolished in November 2003.
This represents 33.76 percent of the total amount contracted during its period of application (84'781'857 euros).
The unpopular tax was introduced by the previous Balearic Government on May 1 2002, and was in force until October 2003, when the present Balearic Government abolished it.

Following a Balearic High Court ruling in 2006, the number of hoteliers opting for deferred payments increased, causing the payments to increase from 5.3 million euros in 2005 to 13.8 million in 2006.

The director general of the Tax department, Jorge Sainz de Baranda, said that since the court ruling “there has been an increase in the number of hoteliers applying for deferred payments. It is the format which most hoteliers choose, with a maximum time for payment of three years, in spite of the fact that they are supposed to pay a “delay” interest of five percent per year. Those who decide not to pay and guarantee payment via the bank, have to pay 25 percent more a year for the simple fact that they chose this formula”.

The Tax Department confirmed that, in spite of the appeals presented, they will strictly apply the “delay” interest laid down by the State General Budget law every year.

At the moment this interest is varying between 4.5 and 5.5 percent. “This will mean that those hoteliers which have opted to appeal, already owe some 20 percent more than the quantity remaining, after the application of the “delay” interest. In any case, some 99 percent of payments have been guaranteed by banks. It is simply a company decision”, they said.

The Balearic High Court started to give its rulings on the appeals made by the hoteliers in June 2006, the last being on February 21 this year.
The court said in all its rulings that the “tourist tax”, which was supposed to go to a fund for the improvement of tourism and the preservation of the environment, did not affect the principle of tax equality, it was not unconstitutional, nor did it fall into the category of double taxation.

According to the court's rulings “from the perspective of IVA (VAT) and the “tourist tax”, this is not double taxation as they are different elements of the tax system”. The hoteliers on the islands, who from the start chose not to pay the tax and appealed against it, have paid a total of 56.1 million euros since 2004, 66.24 percent of the total of 83'781'857 euros.

Among those who still refuse to pay are small and medium sized hotels, as well as large hotel chains.
The “tourist tax” was approved by the last Balearic Government to collect funds for the improvement of tourist areas, and to preserve the environment and cultural heritage items.

The tax was only applied to tourist accommodation, and it was this which caused the hoteliers to reject it and appeal against it in the courts.

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