More taxing times for government

The tourist tax war between the local government and hoteliers is about to start raging again. Next week, hoteliers are supposed to start paying the tourist tax to the Balearic tax office, but until the constitutional tribunal in Madrid rules on central government's appeal against the tax, Palma will not actually get its hands on any money. 80 per cent of hoteliers are refusing to hand over any money until there is a court ruling. In the meantime the tax office will be given bank references, confirming that the hotelier is holding the tax revenue he owes the government in the bank, but that is where the money will stay for as long as the tribunal takes. The Balearic government will be able to take out loans using the bank references as collateral, but should the tourist tax be over ruled in Madrid, the government could find itself in a financially dangerous position - for then it will never see the money from hoteliers. 18 per cent of hoteliers will be paying in the tax, but will lodge immediate appeals against the tax, demanding a refund, while the remaining two per cent have accepted to pay the tax. Hoteliers have 20 days to pay and fiscal experts said last night that those prefering to hold the money in the bank, may have to pay interest should the tribunal rule in favour of the Balearic government and the controversial tourist tax.