Spokesperson for the Partido Popular Balearic government, Miguel Ramis, said yesterday that VAT will not be increased to 18 percent this summer season, although it will rise slightly from the current eight percent.
Ramis claimed that the principal reason for the alleged delay is to protect the tourist industry hence so far as the tourist industry is concerned, VAT will not be significantly increased.
However, in the mid to long term, Ramis was forced to admit that it is highly likely that VAT will eventually hit the 18 percent mark.
But, with the Spanish cabinet meeting yesterday afternoon to discuss where it goes next in trying to cut the country's deficit, Ramis may have spoken too soon.
Political pundits in the Balearics were yesterday claiming that VAT is going to go up on certain goods and, even if the tourism sector is ring fenced with an increase in VAT of just one of two percent, consumers could be hit on other products and services.
The Balearic government has made its position on any further increases in VAT to central government extremely clear and has proposed that it be left to decide what action is taken here in the Balearics with regards to the tourist industry.
But, the government road roughshod over the industry's wishes with the July 1 increase in airport taxes with the introduction of the so-called departure tax so the tourist industry nervously awaits what the Prime Minister is going to decide this week as he draws up another round of austerity measures.
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