With the tourist tax set to increase next year, the Majorca Hoteliers Federation has described the rise as "disastrous". The federation president, Inma Benito, believes that it would also be a "precipitate decision" as the effects of introducing the tax (which was in July last year) are still unknown.
She adds that no positive consequences of the tax have yet to be seen in terms of increasing social value or improving the tourism offer. "As we have said on previous occasions, this is just about tax collection." Benito says that the proposed increase demonstrates a lack of responsibility by the government. The federation, she notes, has not had any communication from the government about the rise.
The tax, she argues, has a distorting effect. This will be more pronounced in the future if the increase goes ahead. The impact will be on the competitiveness of Majorca as a tourist destination. "There may be a significant number of people who stop coming to Majorca at any time of the year and not just in the high season. There will be a direct effect on the spending power of those who visit the islands, which will mean less revenue for businesses. Has the government quantified the impact on companies?"
Benito believes that a tax increase will mean that business profit is affected and that a logical direct effect of this will be on investment: "An impoverishment of the economy which will occur due to cuts in investment for other sectors, such as construction."
On Monday this week a Podemos press conference made clear that the party is seeking a "significant" increase in the tourist tax. The Podemos general secretary, Alberto Jarabo, said that the government parties (PSOE and Més) had already shown that they intended to increase the tax, though this had yet to be quantified. Podemos have been pressing for a higher tax and have made it a condition of giving approval to the 2018 budget.
Last week we reported that the tax may not rise across the board, though it is now being suggested that it will and that, moreover, it will be doubled in all instances. Therefore the lowest current summer rate - 50 cents per day for hostels and some other categories - would be one euro in 2018. One to the three star accommodation would be two euros. Three-star superior and four star would become three euros, and four-star superior and five star would rise to four euros. Holiday rental accommodation would be two euros, as would be cruise ships. To all of these rates one has to apply 10% IVA (VAT).
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