What Mallorca, Menorca and Ibiza can teach us about how to make a tourist tax work in Wales
With direct flights connecting Cardiff to Mallorca, Menorca and Ibiza, the Balearic Islands are regularly among the most popular destinations for Welsh tourists.
Tens of thousands of people travel every year to enjoy the clear blue waters, some of Gaudi’s finest architecture or the famous club scene – and, in the summer, each of them pays a ‘sustainable tourism tax’ between €1 and €4 per night.
Spain is one of 19 EU member states where tourists pay a tourist tax, but the Balearic Islands used their powers as an autonomous community to introduce their own policy in 2016, after the election of a left-wing government a year earlier.
At the time, tourism association ABTA warned it could end up ‘pushing tourists off the islands’ and that was cited in the Senedd as a cautionary tale against the introduction of a similar policy in Wales.
The warnings were based on the islands’ short-lived experience with a tourist tax at the turn of the millennium that reduced visitor numbers.
But, six years after the relaunch of the tax, tourism has not dropped and has raised more than 250 million euros for environmental, social and cultural projects on the islands.
As the Welsh government prepares to launch a consultation on its own tourist tax this autumn, Nation.Cymru looked at how the Balearic Islands turned a botched plan scrapped in two years into a policy that won over critics and is now considered an international success story.
“A Greater Consensus”
“The difference in how the two occupancy taxes appear to have been accepted by the tourism sector provides useful insight into best practices regarding the introduction and administration of these taxes,” said a 2017 report for the European Commission.
So what has changed? According to Dr Antoni Riera Font of the University of the Balearic Islands, it’s not so much the tax itself as when and how it was introduced.
The Balearic government’s first attempt at a tourist tax, known as an ecotax, was launched in a more difficult economic context than in 2016, he pointed out.
Tax collection has also been made easier for hosts. Crucially, after learning the lessons of their first failure, ministers pulled out all the stops to reach consensus on the sustainable tourism levy.
“The fund has been improved a second time. Above all, it has increased stakeholder participation in choosing priority projects to be funded,” explained Dr. Riera Font.
“The first tax didn’t do that. This time it was done on the basis of greater consensus. Today, the tourist tax is widely accepted, not only in society but also among the main players in the tourism value chain.
Six representatives of the Balearic Islands’ business community sit alongside government ministers, local authority leaders, trade unions and community groups on the committee that decides how the money generated from the tax is to be spent .
An executive from one of the business groups represented on the committee said their initial fears had not materialized.
“At the beginning, we thought that the tax [reduce tourist numbers]but the customers accepted it and it was no problem,” said Roberto San Esteban of the Ibiza and Formentera Tourist Accommodation Association.
While the tax is “already accepted” by the industry, he said, “not everyone is happy” with the results.
About a third of the 258 million euros raised between 2016 and 2019 was devoted to environmental projects, such as the restoration of natural habitats damaged by mass tourism or the conservation of animal species and traditional cultures threatened by the climate change.
The second highest expenditure, some 58 million euros, was spent on the provision of 375 additional social housing units on the islands where international buyers are driving up property prices to the point that the Balearic parliament vote earlier this year to review overseas sales limits.
This is just 40 less than the total number of social housing units built in North Wales between 2016/17 and 2018/2019, according to the Welsh Government. statistics. Ceredigion, another holiday home hotspot, did not build a single social or council house during this period.
Millions are also spent directly to improve the tourist offer on the islands, through infrastructure projects like a 10 million euro coastal path in Ibiza, the restoration of cultural heritage like the city walls of Menorca or the training of the local population to work in the industry thanks to the creation of a hotel school.
While not everyone can agree on which projects to prioritize, the levy results, which are listed on a special website in four languages to provide transparency on how the funds are spent, have helped ease tensions between residents and tourists.
“There is going to be an outcry when you do something like this,” said Iago Negueruela i Vázquez, minister of economy, tourism and labor for the Socialist Party of the Balearic Islands. Nation.Cymru.
“But I think it’s a way for people to see that the effects of tourism are shared across society. When we set up a tourist tax, which is done on a European scale and corrects certain effects, it is a way of bringing tourism closer to citizens.
“Tourism has a lot of positive effects – a lot – but it also has effects on citizens and I believe that this tax has helped citizens to say ‘well, thanks to this type of activity, we will do more to protect ‘ [the Islands]. And if you set the tax at a reasonable price, you don’t affect demand.
Indeed, the number of international visitors to the Balearics greatly increased after the tax was introduced until the pandemic hit, rising from 11.6 million in 2015 to 13.7 million in 2019.
The number of Welsh visitors followed a similar trend, with 153,000 people flying from Cardiff to the Balearic Islands in 2019 compared to 125,000 in 2015, Civil Aviation Authority The figures To display.
With tourist taxes starting at €0.10 per person per night in Bulgaria and reaching €7.50 in certain regions of Belgium, according According to the European Commission, the price of the sustainable tourist tax of the Balearic Islands is somewhere in the middle of the European ranking.
“If you apply a reductionist view of competitiveness which is fundamentally a question of cost, it is obvious that the introduction of a tax will always have an effect on this,” said Dr Riera Font.
“But it’s not just a question of cost, it’s also a question of the level of social cohesion, the level of environmental protection, the level of safety, the level of education and these types of taxes , if the projects for which the money is spent are well selected, could be levers of competitiveness.
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