Tourist tax: a (modest) step in the right direction
Last week I was summoned to Parliament to give my opinion on a bill, currently under consideration, that would amend the law on the tax on stays in tourist establishments (IEET). I would like to share my thoughts with readers, but first I need to provide a brief overview of our tourism sector.
From the point of view of economic activity, in Catalonia three very different segments must be considered: the sun and beach segment (which represents 70% of overnight stays), the city of Barcelona segment (more than 20%), and the inland segment (less than 10%).
Regarding the latter, the diagnosis is simple: the more it grows, the better, because it's one of the few tools we have to retain population. It doesn't matter if it's relatively unproductive or seasonal, because the alternative is worse.
As for sun and sand tourism, the main problem is its low productivity: prices and wages are low, and society has to bear the cost of most of the staff during the off-season. Wages are 25% lower than the Catalan average, and as for prices, revenue per available room (RevPAR) is around €60 per night, compared to €165 on the French Riviera. When Catalonia had a surplus of workers struggling to find employment and Spain suffered from a chronic foreign currency shortage, this type of tourism was a blessing. Today, when staff must be brought in from abroad, it's absurd. Everyone loses: the Social Security balance is catastrophic, the Catalan regions and municipalities specializing in tourism have a per capita income below the average, the tourist experience is poor in high season because the service is poor –provided by temporary and unprofessional staff– and because the spaces are saturated, and they are saturated in low season.
Barcelona's tourism sector, on the other hand, doesn't suffer from a productivity problem, because prices aren't low (around €150 per room, the same as in Madrid, though lower than Rome's €170 or Paris's €260) and because staffing levels are stable (since demand is consistent). However, wages are low (though not as low as on the coast), which implies a distribution problem. Furthermore, there's a very serious problem of overcrowding in public spaces, a problem highlighted by one of Spain's most insightful hoteliers, Gabriel Escarrer, when he spoke of "neighborhoods geared exclusively towards tourists, as is the case in some districts of Barcelona [...], theme parks that displease residents and drive tourists away."
If prices are higher in Barcelona than on the coast, it's not because the city is more attractive, but because capacity has been limited by the City Council since 2017 through the PEUAT (Special Urban Plan for Tourist Accommodation), and prices will rise even further when the HUT (Tourist Accommodation Unit) accommodations, which represent a third of overnight stays in the city, are eliminated. The City Council is also addressing the issue of revenue distribution through a surcharge on the IEET (Tax on Tourist Accommodation), to the point that Barcelona collects €150 million, while the rest of Catalonia only collects €50 million, even though overnight stays are three times higher. Furthermore, the City Council intends to double the surcharge as soon as the legislation currently being debated in Parliament allows it. In short, Barcelona's tourism sector faces challenges, but the City Council is addressing them with clarity and determination; therefore, things will improve.
The same cannot be said of the sun and beach tourism sector, where it has not yet been acknowledged that all the problems—profitability, productivity, seasonality, the lack of professional staff—stem from a single structural flaw: the sector is designed for the peak of the high season. This is absurd: we don't design highways for the Easter holiday exodus, nor do we buy homes thinking about the day we gather the whole family. Instead, we insist on investing in coastal areas with the three or four weeks of peak season in mind. A private entrepreneur would never do such a thing, but in this case, the inefficiency lies with the public sector.
We are now in a position to assess the reform of the IEET, which essentially consists of significantly raising rates in Barcelona, slightly in the rest of Catalonia, dedicating 25% of the revenue to housing policies and freeing the rest for objectives linked to sustainability, which is essentially a very broad catch-all.
For Barcelona, the change will be positive and significant, because the City Council will have more resources and will capture a larger share of the prices. For the rest of the country, and despite what the text claims, tourism will be neither more sustainable nor less seasonal, because no one will change their plans just because there's a €2 tax per night. In Barcelona, it will be a second step; in the rest, a tentative first step. It's not insignificant, because the first step is always the hardest.