The Spanish government is striving to take measures that, sooner or later, will seriously harm one of the few industries that, until now, have managed to weather the storm with dignity.
In a recent letter published in the magazine Britain For Events, David Cameron again referred to the British meetings and event industry in the following terms: "I applaud the work carried out by the UK events industry and in promoting Britain," and he endorsed its great campaign, which he described as "an enormous success, above all for the valuable contribution made by the events industry to the country’s economy."
Meanwhile, the Spanish government is striving to take measures that, sooner or later, will seriously harm one of the few industries that, until now, have managed to weather the storm with dignity because of their competitiveness and activity.
The President and the Ministers of the Exchequer and Tourism, among others, all know perfectly well that the new tax measures affecting MICE industry companies, especially the increase in VAT, will inevitably lead to the disappearance of many of them due to their lack of viability. After having to pay national insurance contributions, tax retentions, and VAT, there will be little left to cover general running costs, tradeshow and workshop participation costs, marketing costs or wages.
When in the opposition, the parliamentary group of the Popular Party (PP) was fully aware of this scandalous situation and took steps in Parliament to change it, submitting a bill geared to resolving the VAT problem once and for all. The bill was blocked by the joint opposition of all the other parties, who also knew exactly what they were doing. Now that the Popular Party is in power, holding a majority, it has gone against its promise, increasing the rate applied to the gross margin of agencies from 16 to 21% and maintaining in a discriminatory way the reduced VAT rate for services usually included in the packages that they sell, such as hotel accommodation and transport. Does not this seem rather incoherent?
Increasing a tax which, as established by the REAV (Special Tax Rate for Travel Agencies), is applied to the gross margin, by 5%, instead of applying the reduced rate as the industry called for, is an outrage that has to be addressed forthwith, if the Government does not want to torpedo the industry. And it ought to be done now otherwise it will be too late. It is also important to remember that the specialized agencies operating in the MICE industry have been the prime movers behind the promotion of Spanish destinations. The industry will pay dearly for this blunder.
There are also other issues that are truly puzzling. For instance, the increase in the VAT rate applicable to congress registration fees, which has been increased from 8 to 21%. As anyone in the industry knows, this is a determining factor in the choice of international congress destinations. How will we now fill the congress centres that our town councils have been building over the last few years? We hope that the authorities already have a Plan B for putting them to good use and we also hope that they will not be made to compete with the country’s many "cultural centres".
Furthermore, there is the issue of the new VAT rate for golf courses, which has been increased from 8 to 21%. It would be gross error if this decision were based on the fact that golf is regarded as an elitist sport, since it is thanks to golf that Spain – and above all parts of the Costa del Sol – are chosen as destinations by a large number of companies for their conventions or incentive trips. This activity not only generates income and jobs in the sector, but also in other industries such as hospitality, commerce and services in general, which will undoubtedly be seriously affected by this change, as many businesses will become unviable. Sadly, we are already seeing the negative impact of this measure, and September has just begun.
For all the aforementioned reasons, the great majority of people working in Spain’s MICE industry ask themselves the following question: Why does the Spanish government insist on ignoring the importance of MICE for the country’s tourist industry. In this sense, it is a shame that Spain does not have its own Mr Cameron!
Luis Díaz
Executive Director of the Spanish Association of DMCs (SpainDMCs)
