Dissuasive or persuasive? The tourist tax

A calculation is that the current tax would have to have been increased by five times in order to have prevented this year's increased tourist numbers

Tourists in Deia. | Archive

Andrew EdePalma16/11/2024 07:40

The Sustainable Tourism Tax Commission met last week. The Partido Popular having willingly inherited this body along with the tax itself, the master of ceremonies - tourism minister Jaume Bauzá - presided over a gathering of representatives and told them how the tax revenue is to be spent.

Seventy-nine projects were presented. With a total value of 376,988,790 euros plus 52 cents, these are apparently being funded with 2024 and 2025 tourist tax 'annuities'. So presumably the commission won't need to meet next year, as the spending has already been decided. How much is the annuity? For 2025 it certainly sounds higher than the 148.1 million euros that the government has included in its overall 2025 budget. Ah but, the tax is of course set to increase over the three months of high summer. Not that the government has said by how much. Or indeed, not that the social and political pact for sustainability has yet pronounced on the tourist tax and any increase. Which it is meant to be doing. Some time.

Still, in the absence of actually knowing what the final 2025 annuity might be and being uncertain as to how the government has arrived at a figure of 377 million over two years, let's trust that the 79 projects will be true to the minister's words - "Projects to improve our environment, with special emphasis on sustainability". With two-thirds of the spend to go on the environment and the water cycle, improvement there should indeed be.

Is this, therefore, what the minister meant when he said at London's World Travel Market that "the tourist tax is going to be used to make the Balearics a better place for holidaymakers"? It must be. And moreover, there is to be greater transparency in informing these holidaymakers how the tax is invested. Fine, but how many holidaymakers are actually bothered? Do most visitors simply view the tourist tax as a tax, and that's that?

It's not that there hasn't been transparency in the past, just that the communications have been so useless. A mechanistic approach to information-giving has been the order of the day, itemising to the last cent how much tax revenue is being spent, for example, on an enhancement to the water network in the Maria de la Salut and Petra areas. Rather like a government press release telling us about the 2024 and 2025 annuities. Don't forget those 52 cents!

There is to be a "simple and accessible" means of providing tourist tax information in hotels (and one guesses also holiday rentals, legal ones, that is). Which is fine, but I have believed ever since the tax was introduced in 2016 that the communications have failed to make any sort of emotional appeal to a holidaymaker base that does have high loyalty. Spouting figures for this, that and the next project is all well and good, but it is an approach indicative of a political mindset and not one driven by marketing.

Susanna Sciacovelli, the Council of Mallorca's director for tourism demand and hospitality, has observed that "everyone is on the right track" with regard to the 'island of tomorrow' but that the messaging needs to be improved. She's not wrong there. But ultimately what is the message? And what is the true purpose of the tourist tax? According to minister Bauzá, it appears to be a persuasive tax. Look, it's going to make the Balearics better for the holidaymaker, and to this end the holidaymakers are going to pay more tax from June to August. Or is it dissuasive?

When there was pressure on the last government to raise the tourist tax, I distinctly recall the then tourism minister, Iago Negueruela, saying that the tax wasn't dissuasive. In other words, the tax didn't deter holidaymakers. And the evidence from 2016 on proved him right. But more recently he has spoken in terms of dissuasion. Even President Prohens has implied that high-season numbers of tourists will be checked by the planned increase. Will this be the case?

Lurking in the background to the 2016 introduction of the tax was a report which did assess the tax's impact on tourist numbers. Minimal was the conclusion; less than minimal, as things have things have turned out. But an extrapolation from that report has concluded that the current tax would have to have been increased by five times just in order to have prevented the additional 600-odd thousand of tourists who arrived in the Balearics over the first eight months of this year.

I suspect the deterrent impact would be significantly greater, but herein lies the rub. What is a dissuasive rate? And what would the impact be? There is of course all the talk about a redistribution of tourists to other months of the year. But while the genuinely low season of November to March has shown a clear increase in numbers, as a proportion of the whole year they are much the same as they were at the start of the millennium.

What's it to be? Dissuasion or persuasion? Or a curious mix of either dissuasive persuasion or persuasive dissuasion? A better place comes with a price tag. Does the government know what it is?