The Tourist Tax Lottery

Celestí Alomar, the one-time Balearics tourism minister, said the other day that had the eco-tax been allowed to continue it would by now have realised some 800 million euros worth of investment. 800 million; that's a fair old wedge. The eco-tax was not designed for such purposes, but 800 million would have wiped out the debt that the Balearics health service has and left a goodly amount left over to pay for Palma's Palacio de Congresos and any other number of projects.

Alomar would of course defend the eco-tax and big up the lost opportunity of investment through its continued imposition. He was the tourism minister who introduced it. He was no longer tourism minister when, two years after the tax was brought in, the then government of Jaume Matas scrapped it.

Much as the eco-tax was unpopular and ill-conceived, with hindsight one could argue that there was a good deal of foresight in its introduction. Taxes have come in elsewhere, and Catalonia will bring in its tourist tax from November this year. It was the implementation, the discriminatory basis of the tax and the PR that were wrong, not the eco-tax per se.

The tax had merit, and as a general principle, I believe that tourists should make some form of contribution to services and what have you in their destinations. I know, I know ... tourists pay for services, these services are taxed, businesses pay tax on receipts. I know all this, but this is not an argument which invalidates the concept of a direct contribution to help fund certain services.

Take the health service, for example. Hugely in debt, as everyone knows, it is a health service that is at the disposal of tourists. Indeed, the quality of health service is something which has been identified as being key to future tourism development; not by health tourists but as a vital service to an ageing population that comprises a good chunk of the tourism market. The local health service is hard-pressed as it is. It becomes more so during the main season, especially if some tourists insist on going around jumping off balconies.

Though there are no plans to re-introduce a tax in the Balearics, were there to be, how much would it be? The Catalonia tax has varying rates depending on type of accommodation and where it is. It complicates things, but there is some sense in tourists heading for four or five-star accommodation paying slightly more, but then a similar system of a higher rate would need also to apply to luxury villas. The implementation of such a system is what becomes difficult, and implementation was one of the problems with the eco-tax.

But assuming an efficient system could be established and that a Balearics tax were to be along similar rates as to that in Catalonia, an average tax revenue of around ten euros per tourist would be generated (Catalonia's is to be charged for a maximum of seven nights but won't be levied on children under 16). As a rough estimate, the Balearics could raise in the region of 70 to 80 million euros a year, which over ten years would be getting on for 800 million, as Alomar has claimed the eco-tax would have generated.

This is a significant sum, but as soon as the T-word is mentioned, everyone gets into a lather. So rather than a tax, what about something else? Ladies and gentlemen, I offer for your consideration the Balearics tourist lottery, i.e. the tax would still be applied but would be for a lottery.

Don't ask me how this might be implemented, as it is simply an idea that has flown into my mind. Among other things, a change to tax law would be needed as currently if a tourist were to win the Spanish national lottery and take the winnings out of Spain, he would be liable for tax. But if there were to be a lottery, with a good range of prizes, yes some of the revenue would have to be paid back in the form of prizes, say 20%, but it could well be far more acceptable to tourists. If these lotteries were weekly, then why not also, during the high season in particular, have roadshows hitting different resorts to make the draws. Entertainment, bands, stuff for kids, whatever. This would take some more out of the pot, but it would be strong PR and would represent regular "tourist days" rather than the annual one-offs that occur in Alcúdia for example.

Tax. Lottery. Both would generate revenue, but a lottery would be a whole load more fun and potentially a whole load less painful.


Any comments to andrew@thealcudiaguide.com please.