Palma.—For weeks now, the business and tourist sectors have been calling on central government not to go ahead with any further increases in IVA (VAT), but yesterday, Madrid received its most serious warning yet.

In an official statement, the deputy general manager of one of the world's largest tour operators TUI Travel, which, among others, owns British operators Thomson and First Choice, warned central government that if VAT goes up any more, then the company will “revise its programme” in Spain.

TUI's mainstream brands take over 20 million customers on holiday each year and Spain, in particular the Balearics and the Canary Island, is its most popular destination for millions of Britons and Germans.

However, if the government ignores the pleas from the business and tourist sectors, TUI made it blatantly clear that it will down size the scale of its operations in Spain which will mean less tourists and less revenue.

According to Lundgrun, any increase in VAT will “seriously damage” the country's tourist industry because not only will it make Spain, which is the group's principal holiday market, less competitive it will also reduce the value for money visitors will receive and that will simply make tourists go elsewhere.

Each year, TUI brings some 5.4 million holiday makers to Spain and the government is in danger of losing its biggest client if it does not listen to the professionals.

Lundgren underlined that Spanish hoteliers have invested millions of euros in improving their establishments and facilities in order to compete with emerging destinations which in many cases are already much cheaper, so any further increase in the cost of a package holiday to Spain will just have a detrimental affect on the country's tourist industry and economy.

And, it was not just TUI who joined the debate yesterday.
The President of the Confederation of Spanish Travel Agents, Rafael Gallego, called for IVA to be frozen at its current level. “If the British and the Germans don't come this year, the summer will be a complete disaster,” he warned.

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