Balearics Approves New Eco-Tax On Tourists
The purpose of the essay is to identify the potential impacts of the Balearic Island’s in ‘abolishing’ the eco-tax and recommend alternative strategies to compensate for its effects. In order to achieve this, it is necessary to shed some light on both positive and negative impacts concerning the tourists, host community, hoteliers and the environment. Reasons for eliminating the eco-tax will be highlighted, whilst also concerning its consequent effects on the Balearic Islands.
It is fundamental to understand the term ‘eco’ which is basically, concerns of the environment. One way it can be described is through eco-tourism, which according to Honey & Stewart (2002) is:
“…responsible travel to natural areas, which conserves the environment and improves the welfare of local people”
This suggests that tourists should be aware of the environment and its residents in order to minimise the negative effects their tourism can have on a community. Honey (2002) believes that tourism can create negative ecological externalities in the form of environmental damage. The tourism industry is suggested to damage the natural resources that form the basis for eco-tourism. Eco-tourism can therefore enhance the opportunities for better management of natural resources whilst providing a satisfying experience for the visitor.
It is also vital to understand the term ‘tax’, which according to Mak (2004) is
“an involuntary payment to the government that does not entitle the payer to receive a direct benefit of equivalent value in return”
In simple the aim of introducing the payment of a tax is to ensure everyone is supported. The Balearic Islands achieved this by introducing an eco-tax on 1st May 2002 in order to help restore the environmental damage caused by tourism. The hoteliers were responsible for collecting the payment of approximately 62p a day for each person at a three star hotel of persons over 12 years old. This meant that almost ï¿½35 was added to an average family holiday. (www.bbc.co.uk)
An article from Tourism Concern (2002) ‘Balearics eco-tax gets the vote’ stated that the eco-tax was reinforced to reduce environmental impacts; nevertheless the revenue earned would be used on
“cleaning up the beaches, estates restored, heritage sites maintained, cycle and walking routes developed, rural economies boosted, and hotels encouraged to implement energy and water conservation measures.”
The tax was set to bring in 25 million Euros from the 2002 visitors with subsequent years contribution predicted to top 45 million euros.
An article by Palmer (2001) ‘Eco tax not enough to save the planet’ suggests that
“everyone will be paying ‘eco tax’ or ‘environmental tax’, happy in the knowledge that they are saving the planet”
This article shows slight sarcasm, as although taxes are introduced, it may not be helping the environment. To some extent this can be valued as true, but surely paying a tax will mean maybe less people will travel to destinations hence less damage to the environment.
The Balearic Islands have been recognised as a low cost, low quality package holiday destination. Therefore Spain, may have introduced the eco-tax to diminish this image and help re-educate the traveller; at the same time providing funds for conservation, which would directly benefit the economic development and help local communities.
The Balearic Islands have a population of approximately 800,000 residents, yet nearly 11 million tourists visited each year. Therefore one can imagine the negative effects caused by the mass tourism. Hunter et al., (1996) believes that the impact of tourism upon the environment can be reported as short term or long term, direct, indirect or induced into two categories of negative and positive changes.
An article by Morgan (2000) ‘A Taxing Time’ suggested that the eco-tax was part of the electoral programme and most people saw it as a positive measure, recognising the importance of investing in the environment, restoring and conserving certain areas of special importance. Others assumed the tax would reduce the number of tourists wanting a cheap holiday and focus on having less, higher spending tourists.
So, what were the reasons for the government of the Balearic Islands to abolish the eco-tax if the revenue received would benefit them? There are many different theories suggested a number of which will be discussed.
A news extract from The Times stated that the “Government has decided to abolish the controversial eco-tax”, taking place on October 2004. The tourism Minister believed that in having the eco tax “did more harm than good”. An article from The Sun ‘Tax Axed for Holiday Isles’, reinforced the ” negative effect” on tourism. Suggesting that the eco-tax was not favourable for the Balearic Islands.
Again supporting its abolition, .an article in the Express on Sunday Jeferies (2003) suggested about the eco-tax that
“it is a move in the completely opposite direction to the one the government should be working in. They need to change strategy and adopt policies to revive and boost tourism”
It is understood that the Balearic Islands need to introduce other ways in which the environmental damage is minimised and ensure that visitor numbers are increasing at the same time.
Balearics Tourism office spokesman Jaun Vallespir suggested that the majority of tourists and foreigners were in favour of the tax, the drop in visitor numbers was down to economic problems in Europe and Post September 11th. Suggesting that there were a number of other reasons affecting tourism.
Nevertheless a survey carried out by ABTA (Association of British Travel Agents) found that 64% of tourists would be willing to pay an extra ï¿½10 to ï¿½25 to ensure environment standards, associated with their holiday were met. If such a high percentage of tourists were willing to pay why would the government still decide to abolish the tax?
The Express on Sunday (2003) suggested that although the revenue obtained from the eco-tax could help protect the environment, it showed that visitor figures in 2002 were down by 900,000, creating a deficit of more than 800 million. Only 28 hotels out of the 100 were now staying open during the winter season.
Spain’s Balearic Islands have been internationally famous for having experienced rapid tourism development but were now suffering following the introduction of the eco-tax. “The islands depend on tourism for 84% of the Gross Domestic Product” (http://www.tourismconcern.org.uk. This indicates that the Balearic Islands have been heavily reliant upon tourism.
Jaimw Puig suggested having an eco-tax gave an impression that the islands are in undesirable conditions. (http://www.ft.com)
“The regional government gave the impression that the Islands were in a bad state of repair, that it is a terrible image to send abroad”
This suggested that by having the eco-tax The Balearic Islands were portraying a bad image for the resorts by suggesting they needed money to improve their environment. However, this may be due to lack of knowledge and accessible information tourists require.
Knight (2002) – http://www.observer.co.uk “…they are doing a lot to change their image but they are coming across as greedy.” Maybe the Balearic Islands could implement a tax for those tourists partaking in certain activities that are harmful to the environment. This is identified as a user charge, according to Mak (2004) it is
“a price charged by governments to users to pay for specific government services or privileges”
User charges are an appropriate way to finance public services when most or all of the benefits go to identifiable users, and non-payers can be excluded from using the services at a reasonable cost. By doing so, they would still have tourism coming in and revenue earned from taxes would be used to rejuvenate areas of that are environmentally damaged. According to Gilpin (2000) Belgium had imposed eco-taxes on products since 1993, applying them to goods considered to be harmful to the environment (Pittevils 1996- cited in Gilpin, 2000, pg 150) Alternatively the new ‘coach tax’ levied in Venice is apparently an attempt by the city to reduce the number of motor coaches coming into the congested city. User charges used for such purpose are most effective when demand is price elastic.
Westwood (2002- http://www.travel.telegraph.co.uk)
“the tax could deprive the Islands economy of more than ï¿½300 million per year if tourists go elsewhere”
Balearic Islands are very dependent on tourism therefore need to implement something that is feasible. The Gambia Tourism Authority has introduced a tourism development levy of ï¿½5 per tourist from the 1st November 2002. The tax would be used to develop green areas, improve lighting in tourist areas, security and training for employees within the tourism sector.
According to Barrett (2002) ‘Unfair yob tax or fair pay?’ suggested that people were annoyed with the extra costs. The Sunday Times reported, “hotels are less than 40% full” there has been a huge fall in visitor numbers that the tourism industry are blaming on the eco-tax. Travel Trade Gazette – cited in Tourism Concern 2002 reported that hotels were handing out food and drink tokens to pacify the guests. The tax was unpopular with holidaymakers as it added an extra cost on holidays. The hoteliers didn’t agree with the idea, as they were responsible for collecting the tax and tour operators felt that it had caused a decline in visitor numbers. Therefore maybe abolishing the tax would help resolve some of the problems, but at the expense of the environment.
Increased competition from tour operators has led to cheaper flights. There is a direct flight that British Airways have recently started, from UK to Menorca costing approximately 125 euros (www.bbc.co.uk). Having cheaper flights to Balearic Islands will mean an increase in numbers to the destination hence have a knock on effect on the environment. The tax is being abolished yet more and more competition between airlines, means a huge increase in the number of visitors. To exploit this, an alternative solution would be to have customers pay an airline tax instead.
According to an article from Friends of the Earth (FOE), they believe that if a charge for the UK flights was left unaltered but the charge of flights to Europe increased by ï¿½5 and other international flights by ï¿½10 the longest and damaging journeys would be taxed more heavily. This would raise an extra ï¿½700 million per year. www.foe.co.uk, by including tax via flights it would seem part of the cost rather than an additional payment. Whilst, also reducing friction between guest and hoteliers.
Additional alternative strategies could be to ensure that the carrying capacity is under control. Mathieson and Wall (1982:21 – cited in Holden 2000 pg. 138)
“carrying capacity is the maximum number of people who can use a site without unacceptable alteration in the physical environment and without an unacceptable decline in the quality of the experience gained by the visitors”
If the carrying capacity is controlled in the Balearic Islands this could minimise the environmental damage. This could be instead of the eco-tax and may not result in the fall of visitor numbers. However environmental impacts will continue, therefore they could carry out environmental impact assessments (EIA), which would be beneficial to the destination, as they can assess certain areas affected.
In conclusion, in order for the Balearic Islands to remain in the competitive market of tourism certain changes need to be addressed. Abolishing the eco-tax means that the alternative strategies put in place need to be carefully planned to ensure they are customer friendly, cost effective and not economically damaging. Clearly the eco-tax was introduced to provide financial support for the damage caused through tourism. Yet it failed to predict the decline of visitors, which in the long term would have a more adverse effect on its economy, yet a promising effect on its environment.
Due to the fact the Balearic Islands relied heavily on its tourism income it would be seen as a positive measure to abolish the eco-tax. However this meant other solutions would be required to conserve the environment. As suggested airline taxes, user charge and carrying capacity are just some of the strategies suggested to alleviate the problems. As these have just been newly developed it will still require time and research to see their success in relation to the Balearic Islands. Therefore whilst these measures have been recommended as solutions to the abolishment of the eco-tax one will have to wait and see its success.