Balearics finance minister Rosario Sánchez with the president of the Balearic parliament, Vicenç Thomàs

Balearics finance minister Rosario Sánchez with the president of the Balearic parliament, Vicenç Thomàs.

05-09-2021Govern de les Illes Balears

The Balearic government is not intending any changes to taxes in the 2022 budget. While Madrid's president, Isabel Ayuso, has announced the suspension of payment of three taxes that are specific to the region, the view in the Balearics is that maintaining the taxes are essential for maintaining public services, especially at the current time because of the impact of the pandemic.

Regional governments have the power to establish specific taxes - Catalonia, with fifteen, has the most. In the Balearics there are four - a tax on bingo prizes, the charge for water hygiene, another charge for waste incineration, and the tourist tax. The waste charge has been levied this year for the first time.

In 2020, revenue from the tourist tax was 39 million euros and from the water charge 77 million euros. The bingo tax raised zero revenue. There was a significant loss of revenue, most obviously from the tourist tax, for which provision was over 100 million euros. At present, it is not known what the tourist tax revenue for 2021 is likely to be, but the government is expected to be down by some 300 million, largely because of a loss of 209 million euros from the regional financing system.

For 2022, a ceiling on spending is due to be agreed by the cabinet later this month. For the four taxes, there will be neither a decrease nor an increase. The expectation is that there will be a small loss on pre-pandemic years.

Some relief in terms of spending has been provided by the national minister of finance, Maria Jesús Montero, who is allowing regions to have larger deficits this year.

In 2021, the limit on non-financial spending, i.e. that spending which isn't on payment of debt, is 4,726.5 million euros, a 7.8% increase over 2020 and one that reflects the need for spending in light of the pandemic.

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