Monday, January 08, 2018

Hotels Or Not, There's Still A Tax

The tourist tax, as a fiscal measure to be adopted by zealous governmental authorities, throws up some peculiar situations and anomalies. The concept of the tax is a global one, and the world and its local administration wife seems keen to contemplate its introduction, even under the daftest of circumstances.

Have you heard of Oakland in Oregon? It has a population of under 1,000. It wouldn't go amiss in Mallorca therefore. It would be rather akin to Sant Joan, which does admittedly have a population more than twice the size of Oakland, but then Sant Joan does have something in common with the Oregon village. It doesn't have any hotels. There is something else that they share, and that is a tourist tax.

As far as one can be aware, Sant Joan town hall has never wished for a tourist tax. Had it ever wished for one, it wouldn't have been in its gift to have raised it. Local authority fiscal regulation doesn't permit this. Sant Joan, largely or almost totally indifferent to the notion of a tourist tax, therefore had to wait for the Balearic government to start hovering over what tourist accommodation it has with a demand for (as from this year) two euros per person per night for a holiday rental.

Oakland, on the other hand, is not subject to the same sort of municipal tax-raising restrictions. It has introduced a tourist tax despite not having any hotels and indeed only have one holiday rental property. Mayor Bette Keehley says that it was a case of addressing the issue before having the need to do. Whenever that might be.

As things stand, there is no tax revenue from the holiday rental. That's because there are no specific regulations for Airbnb and its ilk. Oakland therefore has a tax but no one to charge it to. The municipal coffers are being increased by zero.

But at least in Oakland, the town hall has the wherewithal to implement a tax and to keep the revenue. The chances of it being able to from a hotel are, it has to be said, somewhat slim. There are no plans at present for there to be a hotel. Nevertheless, it highlights another peculiarity of the tourist tax, which is that individual municipalities have virtually no say in what happens with the revenue. What little say they do have is uttered on their behalf by their federation, the representation of which on the tax spending committee equates to 6.25%.

It will of course be argued that the tourist-tax-raising largesse of Calvia, Palma and other major tourism municipalities bestows on the likes of Sant Joan funding for improved water works and heritage museums that no one will ever visit. Sant Joan town hall will doubtless be aware of this generosity, but might it not have been the case - when drafting the tourist tax legislation - that some thought could have been given to exemptions?

If it is genuinely the case that the Balearic government and its tourism policy sidekicks at the Council of Mallorca wish to foster tourism in the more unlikely parts of the island, i.e. Sant Joan, then why go and impose a tourist tax? Ok, we get the point that there are no hotels, but there is some tourist accommodation, and there could be more, courtesy of the Council's mad criteria for rental zoning.

Ah but, the government replies, the tourist tax won't affect the type of quality tourism Sant Joan can attract, assuming anyone has ever heard of Sant Joan. True perhaps, but nevertheless why are there any exceptions if Sant Joan is not entitled to be one? You didn't think there were exceptions. Oh yes, there are. Or rather, there is. One fairly substantial one. It's known as Menorca.

The hoteliers federation for Ibiza and Formentera is furious that a last-minute amendment to the budget for 2018 slipped in a bit about a 20% reduction of the tourist tax rate for hotels in Menorca that stay open for more than five months. More than five months!? Well, yes, because it is even harder to keep Menorca open than it is Mallorca or indeed Ibiza (though the hoteliers there say that it is equally as hard to operate for five months). The reduction is thus an acknowledgement of circumstances in Menorca. It is also the consequence of Més in Menorca making demands of the government: Més, the party which in Mallorca was essentially responsible for the tourist tax - for the whole of the Balearics without exception, be it Menorca or Sant Joan.

The unspoken reality of the incentive for Menorca is that the tourist tax can potentially he harmful to tourism. The government will never admit this, but how else does one interpret the reduction? Menorca thus exposes the illogic of the tax, as also - for a different reason - does Sant Joan.

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