Tourist tax takes off

July 1 marks the implementation of the new ‘eco tax’ to be charged on all tourists arriving in the Balearic Islands.

Precise rates depend on the star ranking of the hotel chosen and range from €0.50 to €2 per day +10 per cent IVA (VAT). 

Cruise ship arrivals are not excluded from the tax and will be charged €1 +10 per cent IVA (VAT) per day. 

Balearic Vice President Biel Barcelo, along with President of the City Transformation Agency Antoni Vives, recently presented the results of a study on how the tourist tax will impact the Balearic economy.  

Negative repercussions of up to 0.8 per cent on tourist spending were considered likely, while the positive impact on demand was estimated at 4 per cent.  

Biel argued that the tax would have a minimal impact on the price of a package holiday since it would amount to only 1 per cent of its total average cost. 

In the worst-case scenario, the economic drain could be around €36 million from GDP and the loss of 741 jobs due to a reduction in overnight stays and tourist spending. 

On the other hand, projected revenue from the tax is estimated at €75.8 million, compensating for some of the losses and ultimately creating more jobs.