IVA hike and tourism

According to Exceltur, the tourism GDP could fall by 1.5% in 2012 with the increase in IVA (VAT) from 8% to 10% in the sector and turnover could drop by €2 billion if the increase is passed on to the consumer, which it undoubtedly will be from past experience.

Exeltur are hoping that the increase will not come into effect until October or, better still, January 2013. Although the increase should not affect jobs this year, Exceltur believes the rise could cost 19,000 jobs a year as from 2013. An immediate implementation of the IVA hike would result in a loss of around €203 million on holiday packages sold at fixed prices.

Exceltur has also revised its prediction for the fall in tourism GDP from -0.3% to -0.6% based on a decline in national tourism and loss of impetus in the foreign market.

One would imagine that the actual price increase of goods and services to the consumer will not merely be the 2% IVA hike but will also involve rounding to avoid ‘cents’ coming into play and possibly cumulative increases if the supply chain is long.

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