Saturday, April 09, 2016

Questions Of Illogic: The tourist tax

The draft for the law on the tax for touristic stays and sustainable tourism (the final version has yet to appear on the Official Bulletin) makes numerous references to items of legislation, both Balearic and national. One item it does not refer to is the revision of Article 78 of the 1992 law on the "impuesto sobre el valor añadido" - IVA. This revision was made in March 2012. At around the same time, the Catalonian parliament was approving the tax for touristic stays, which was introduced in November that year. The national government's amendment was well-timed, more than just coincidental. It established the basis for applying IVA (VAT) to a tourist tax, or rather THE tourist tax, as Catalonia was the only part of Spain that was proposing one; it is still the only part of Spain which has one, though the Balearics will shortly join it.

Had it been any region of Spain other than Catalonia that was bringing in a tourist tax, it is a moot point as to whether Article 78 would have been revised in the way that it was. But it was revised. A leading hotelier in Barcelona observed that it seemed somewhat illogical to have a tax on a tax, but Catalonia was obliged to comply with Article 78.

Biel Barceló, the tourism minister, says that it is illogical that a tax raised in the Balearics should be subject to a national tax. He may well think this, but he knew full well that there was such a national tax. The announcement of the application of IVA may have taken some by surprise, but it would have been no surprise to the government. It has known about it all along. Yet, when it came to the drafting of the legislation, there was no mention of IVA. It might strike some as strange that legislation of a tax nature should overlook a tax element.

It is only now, when the government is getting around to communicating information regarding the tax, that it has chosen to give the full story. It is disgraceful for it to only be doing so now. It is equally disgraceful for Barceló to keep referring to small amounts of money - a few cents in the case of the IVA element, he has said. The amounts may not be great, either the tax itself or the IVA add-on, but one person's small amount is another person's not so small amount. It's an insult. Barceló and others would do well to remember that the industry it so dearly wishes to now sustain was originally built with money from ordinary working people.

The IVA admission is, unfortunately, just another example of how poorly the tourist tax has been managed. As someone not opposed in principle to a tax, it has been the obfuscation, the vacillating as to its purpose, the simplistic references to "small amounts" and the interminable sustainable clap-trap that has led to a revision in attitude. And one can add, for good measure, the fact that the Balearic tax will represent a greater burden for the taxpaying tourist than Catalonia's does.

The hoteliers, meanwhile, see the same illogic as expressed by the Barcelona hotelier. What is the justification for applying IVA to the tourist tax? What service is subject to tax? The service of the regional government's unofficial tax collectors, i.e. the hoteliers and other accommodation providers? Only the national government can say, which is of course a convenient cop-out for the regional government. Don't blame us, blame Madrid. Maybe, but then Madrid didn't introduce a tourist tax. It just changed the IVA rules to ensure it got a bit more revenue for itself from an administration it wasn't friendly with (Catalonia) and will now get some more from an administration with which diplomatic, financial relations have all but broken down.

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