Friday, January 26, 2018

The Explanation Game: Tourist Tax

President Armengol attempted to go on the offensive last week. She was being harangued in Madrid by leading hoteliers over the tourist tax. Carmen Riu criticised the lack of information for tourists about how tourist tax revenue is spent. Armengol responded by stressing the "great social acceptance" of the tax, noting that others (i.e. Greece) were bringing in a similar tax, and then challenging Riu to provide an example of how a tourist tax purpose is better explained than in the Balearics. "I paid seven euros tourist tax in Brussels, and no one told me what it was for."

Well, quite. Go to a city where there is a tourist tax (or whatever it is called), and there invariably won't be any explanation. Why should there be? It's a tax. You pay it. End of story.

The Balearic government can, one supposes, to be applauded for attempting to get across how the tax is spent. There is at least some transparency, even if the communication is utterly lamentable. But why is so much emphasis being placed on the need to explain the purpose of the tax? Did Catalonia undertake a major information campaign to detail the reasons for its tax when it came in back in 2011? No. There was information, mainly just through the press, and strange though it may seem, the tax was to be spent on tourism.

Most variants on the tourist tax theme are simply means of increasing revenue, be these for cities, towns or national governments. Rome, for instance, was pretty clear when it introduced its tax. Italy was in deep economic trouble, so therefore Rome was as well. The tax was to help pay for services. There was no attempt at wrapping it up as something that it wasn't. It was a tax, and one to swell the city authority's coffers.

A problem for the Balearic government is that it has disappeared so far up its collective backside of sustainability allied to the need for transparency (etc. etc.) that it has ended up being unable to truly explain why there is a tax. If it were being truthful, it would admit that it is a general tax (didn't the finance minister more or less say this on one occasion?). But no, it has to massage the message with all the sustainable guff that it comes out with. Which is by no means to decry policies of sustainability; merely that everyone grows sick of hearing about them. Everything's for sustainability. Thus, the tax and its purpose lose meaning.

Is it the case, however, that the government sees a need to inform because it is fully aware that there might just be some resistance to the tax? Its own statements have included the fact that there were barely any complaints when the tax came in. Which is true, but these were complaints sent directly to the tourism ministry. Who does that? Three or four people, it seems. Everyone else complains on social media, of which this government appears to be embarrassingly ignorant.

This apparent lack of complaint equates to the government message of social acceptance of the tax. There are taxes elsewhere, and travellers are now used to them. The Balearic tax is no different.

It's true that it isn't totally different. There are tourist taxes for whole countries with a high reliance on sun and beach tourism, e.g. Croatia. But they aren't on the scale of the Balearic tax. Travellers may be used to paying high taxes in cities, they may even now be accepting of some form of tax for when they (typical families) have their annual holidays, but it is the amount that is different. It can prove costly.

The desperate need to convince has now led the tourism ministry to fire off letters of explanation to Abta and its German counterpart, DRV. And what do we find in this letter? The same old business about the percentage of the overall cost of the holiday which Biel Barceló trotted out. As for "market prices" determining the new rate in 2018, what market? The justification is arrant nonsense. Or would be if the Greeks hadn't come along and introduced their tax. Greece has given the tourism ministry its opportunity. "Look, we're explaining how our tax is being spent. It's saving the environment (or words to that effect). What are the Greeks doing? Just slapping on a tax to raise revenue for the government?" Which of course the Balearic government isn't.

Being overlooked is the fact that the Greek tax is per room and not per person. But by resorting to making a comparison with the Greeks just seems to weaken the government's message, not strengthen it. If the government were so convinced of its case, it wouldn't need to explain anything. It isn't convinced, because although it won't admit this, there isn't "great social acceptance".

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