Saturday, February 27, 2016

Subsidising OAPs With The Tourist Tax

Pilar Carbonell is the director-general of Balearic tourism. In other words, and despite not being an elected official, she is the islands' tourism number two behind the minister, Biel Barceló. Tourism director-generals have been known to get promoted: Jaime Martínez, the previous minister, was a DG under Carlos Delgado. So, they're pretty important people.

I've met Carbonell. She seems attentive and sensible enough, so what was she doing coming out with yet another proposal as to how tourist tax revenues should be spent? As a DG she's in a reasonable position to have a view, but it was the purpose that didn't seem wholly reasonable. She was proposing that some of the revenue should go towards a type of Balearic senior citizens' winter-season tourism programme. This was not the Imserso programme that is statewide but one based on it and seemingly for Balearic OAPs only.

As Imserso provides subsidised winter breaks for Spanish pensioners, Pilar's version presumably entails tax revenue being used for subsidies. To be fair, it isn't in principle such a mad idea. Tackling seasonality is supposedly a key objective of the sustainable tourism tax law (it's in the draft legislation at any event). And seniors' winter tourism fits that particular bill. However, there are flaws to her scheme.

The first is: why should tourists from other countries help to foot the bill for tourists in the Balearics to have a winter break? The demands being made on foreign tourist altruism via the tax are high enough as it is. I'm unsure that this altruism stretches to subsidised OAP holidays. But if it does, then why not include tourists from other countries? Holidaymakers might not find it such a bad proposition if they knew that their tax payments were to go on helping to fund a winter's holiday for mum and dad or gran and grandad. It won't though, which thus raises the potential for discrimination. Europe's lawyers would be all over the proposal like a rash.

The second is: where do these senior citizen tourists typically stay? Hotels. In fact, they only stay in hotels. The Imserso scheme is a decent means of allowing some hotels to keep open in the winter and to keep people gainfully employed. In this regard, the scheme might be thought to be useful. But aren't the hoteliers supposed to be some sort of devil incarnate when it comes to the government and the tourist tax? 

Thirdly: if the holidays were to be subsidised, would the tax be as well? Ah, actually not, because the government's draft legislation makes an exemption for Imserso tourists. Yes, if you're Spanish, you're on a pension and you're on an Imserso scheme, you don't have to pay. Another one for the discrimination seekers.

Fourthly: while hotels might be able to fill some rooms and keep some people in jobs, what about other businesses? One of the failings of Imserso is that, typically, the Spanish OAPs spend virtually nothing outside their hotel. The main additional beneficiaries are coach operators who ferry the pensioners around on excursions. Bars, restaurants and others are rarely beneficiaries.

All in all, therefore, the Pilar proposal doesn't sound that good. But then she was doing what everyone else is, and that is seeking to find ways of claiming the tax revenues. Palma wants a 10% cut of it (the PP in Palma do at any rate). Calvia wants its slice. Always Palma, always Calvia: the rest can go hang. The government, though, is trying to avoid there being any divvying-up by location. The revenue will be spent project by project, though the terms of reference for this are unknown. This hasn't stopped the Council of Mallorca coming out with its own demand: 74% of tax revenue should be spent on Mallorca, it says.

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