Private health care is currently exempt from IVA. | Joan Torres

Carmen Planas, the president of the Confederation of Balearic Business Associations (CAEB), stressed on Monday that "now is not the time to raise IVA (VAT) in the private education and health sectors".

Insisting that IVA should be reduced for sectors hardest hit by the pandemic, Planas voiced particular concern at the Spanish government's intention to eliminate IVA exemption for the private education and health sectors in the next budget. This would "violate the fundamental right to freedom of choice of citizens in the Balearics".

Planas, echoing the view of the CEOE national employers' confederation, argued that this measure would have "little collection efficiency" as there will be a negative impact on the demand for private education and health, especially because of the current recession. It will lead to a loss of jobs and of businesses.

The CAEB president referred to opinion of the AIReF independent fiscal responsibility authority. This is that the increase in collection from eliminating the IVA exemption will be less than the cost to the public sector from having to provide the same services to individuals who decide not to continue with their private policies. The change would therefore bring about "an economic effect contrary to the desired one".

The confederation is emphasising the need to reduce IVA in order the prevent the increase in unemployment from "snowballing". "We have repeatedly asked for IVA reduction, especially for those sectors hardest hit by the pandemic." In this regard, and in reference to tourism, Planas noted the UK reduction of 15% (to five per cent) for the tourism sector.