VAT hikes will not hit tourist industry claims Minister

THE Spanish Minister for Industry, Tourism and Commerce, Miguel Sebastian, yesterday said that the proposed increases in VAT will not hit the tourist industry.

All areas of the tourist industry, in particular the Majorcan Hotel Federation, have strongly criticised the government's plans to put the level of VAT up by two points next year as part of its latest attempt to raise extra funds to combat the recession.

Sebastian said yesterday that Spain will continue to have some of the lowest rates of VAT in the Euro zone and that the government has increased the amount of money pumped into the tourist industry from the 137 million euros made available by the former Partido Popular government to the current 778 million euros.

However, the tourist industry maintains that the government should have followed the leads taken by France and Greece where VAT has actually been reduced to help tourism and other key business sectors.