Tax also rejected by mallorca and ibiza associations

Menorcan car hire firms reject proposed Balearic "autotax"

Companies fear that they would have to foot the tax bill themselves as next season´s prices have already been published and would be difficult to alter

CHRISTINE M. WATTERSON.Maó

Local car hire firms have held meetings during the past week to discuss the Balearic Government´s proposed "autotax", which would add a further five or six euros to the cost of renting a car next year.

The two associations representing car hire firms on the island, AEVAB and AEMAC, have both rejected the government´s proposals (as have associations in Mallorca and Ibiza). The main objection is that the companies have already published their prices for next year and it is now too late to include the tax in their tariffs; it would therefore fall to the companies themselves to pay the required amount to the government. Another reason put forward is that it would give the island a bad image: Menorca is already considered to be an expensive destination and this would only add to that impression.

Apart from bringing in revenue, the government feels that imposing such a tax would stop unfair competition in the sector. This usually works by large car hire companies (the majority of which are in Mallorca) buying cars in bulk, at discounts of up to 60% off the market price, and then selling the vehicles to other European countries without them having been used in the rental business. These companies can make large sums of money in this way and can then afford to rent out their other vehicles at greatly reduced prices, undercutting competitors.

Menorcan car hire firms feel that this is illegal, as well as being unfair, and call for the law to be enforced to prevent the practice rather than the imposition of a tax on the hire cars. As an alternative they are calling for the companies which import cars to be taxed rather than those which rent out vehicles.

Although the initial purpose behind the tax was to subsidise the national health, the government said last week that funds raised would now be used for the right projects at the right time.

As the proposed tax has now been rejected by associations in the three main Balearic Islands, local firms hope that the government will keep to its word: that the tax would not be imposed without the consent of the sector.