Taxing Tourists: Morality and promotion

Despite the regional government having dismissed the idea of introducing a tourist tax, the possibility of the Balearics getting such a tax is being taken increasingly seriously, if the coverage of the subject in the Spanish tourism media is to be believed (and it probably should be).

This is a subject I have considered in the past. Fundamentally, I am in favour of a tax if only on a sort of moral basis; tourists make use of resources, some of which are limited or become hard-pressed, so why should the burden for payment of these resources be solely down to businesses and residents.

There are of course reasons why a tax shouldn't be introduced. One is that it would add to the creep of stealth taxes that travellers are being expected to pay, such as with the British and German air duties. Increasingly, however, governments of all types are shifting the onus for state funding more and more on to the shoulders and wallets of the consumer, an example in the Balearics being the introduction, from 1 May, of the duty on petrol to help pay for the islands' bankrupt health service.

A point I have made in the past about a tourist tax in the Balearics is that the government would be well advised to wait and see what impact Catalonia's tourist tax (to come into effect in November) has on Catalonia's tourism. But it is the mere fact of Catalonia introducing its tax that is raising the possibility of one being implemented elsewhere.

The moral argument for a tourist tax can, however, be undermined by what it is intended to fund. Though the Balearics' old eco-tax was a fiasco, there was a moral justification for it. A similar justification is difficult if a tax is earmarked to pay for a region's tourism promotion, which is exactly how the government in Catalonia intends to spend it.

The question of morality goes straight out the window, however, if other regions see that a rival tourism destination is capable of pulling in some 100 million euros which are then lavished on promotion. Catalonia anticipates generating such an amount. With the Balearics having slashed its promotional budget to little more than nothing, with the Balearics Tourism Agency losing 20% of its staff and with national government stripping out a further 30% from the budget for the ministry which includes tourism, there is a very strong case for an alternative source of promotional funding to be created. Morality can go hang.

Catalonia might not generate its 100 million. The tax could backfire, which makes it even more advisable for the Balearics to hang fire, but there are pressures which might make the Balearic Government act, one of them coming from the hotel industry. It is looking on aghast at the lack of promotional spend and is as aghast at the prospect, if Catalonia's tax works, of a major increase in promotional effort from across the Balearic Sea.

The hotel industry's alarm at the promotional piggy bank being all but empty and at Catalonia's industry becoming like pigs in the muck of promotional spend from next year on is reasonable enough, though were it of a mind to, it could fund tourism promotion out of its small change. Meliá, for example, with total revenue in 2010 of 1,251 million euros is not exactly short of a bob or two. But why should the industry fund promotion? It pays its taxes presumably. Moreover, the hotels are well represented on the private Fomento del Turismo (i.e. the Mallorca Tourist Board), yet they seem incapable of helping it out of its financial hole, one left by the government having withdrawn its funding.

The government and the tourism industry, facing another record year, unless the unions manage to scupper it, can't afford to hope that records will keep on being broken. There has to be promotion, especially to the new markets they crave. Tourism minister Delgado, who has wielded or been forced to wield the promotional axe, seemed to get the message that an embarrassing presence at the recent Berlin travel fair should not be repeated, but where will the money come from to prevent such further embarrassments? Ten million or so tourists even at a meagre tax average of, say, two euros a pop would do nicely.

But would tourists stomach it? Would they find the notion of paying for promotion to attract other tourists morally defensible? In Catalonia, at least the government is being honest, but it is going to find out whether tourists place honesty over another demand on their wallets.


Any comments to andrew@thealcudiaguide.com please.