Palma.—The local government provoked outrage at home and overseas when earlier this year it announced it was going to introduce a set of three eco- taxes which would be applied to the car hire sector, large hyper markets and the packaging industry.

Local business sectors received support from industry on the mainland and the Association of British Travel Agents, ABTA, even wrote to the Balearic President warning him of the damage introducing surcharges to the car hire sector and what it would do the region's tourist industry.

In fact, no sooner had the extra taxes been announced, local car rental companies began reporting cancellations.
ABTA contacted the authorities in Palma after it learnt of the proposed introduction of a new eco-tax on rental cars and motor homes in the Balearic.
Tax would vary
The proposed tax would vary from 3 euros to 7.5 euros a day, depending on carbon-dioxide (CO2) emissions and be collected from customers by the car hire company, even if the customer has paid for the full cost of car hire up front. ABTA asked the authorities not only to reconsider their decision, but also to ensure they do not rush ahead with the tax.

Such decisions may offer a short-term boost for government coffers, but hasty decisions that do not give travel businesses time to prepare and that take tourists by surprise can have a damaging impact. “No-one is underestimating the economic challenges many countries are experiencing, but taxing tourists does more harm than good in the long term, as past experience has shown,” ABTA told the Balearic government.

And, it appears that the pressure which has been mounting on the Balearic government appears to have made the local authorities think twice. The U-turn was announced yesterday by the Minister for Tax and Budgets, Jose Vicente Mari who explained that, while the introduction of taxes has been postponed, the government and the three business sectors will continue negotiations in a bid to find a common ground.

Tough call
However, that is going to prove tough.
The car rental and packaging sectors want the taxes scrapped and they have shown no signs of giving in.
The hyper markets, who like the other two sectors, have made it clear that under the ‘current economic climate' any extra costs will have to be passed onto the consumer, will probably follow suit.

A spokesperson for the Balearic Business Associations welcomed the news saying “it is good news for everyone in the Balearics, especially, the tourism industry which is what we depend on.” Putting a brave face on, the Balearic President, Jose Ramon Bauza, said that he too “welcomed the decision and praised all parties involved for being prepared to continue negotiating. “In the mean time, they can all relax until the end of the summer season,” the President said.