Entrepreneurs in Algarve fear 2012 VAT rise

By PAULO SILVESTRE [email protected]

An increasingly worsening financial situation has seen tourism chiefs coming together to coordinate a response to the Government’s announcement about a possible VAT increase affecting the sector in 2012.

The industry has already been hit by the general economic crisis and now is facing additional VAT increases, which, if brought in, could lead to “a disastrous situation”.

The president of the Algarve tourism board ERTA, António Pina, fears that the possible VAT increase in the restaurant sector from 13% to 23%, combined with the charging of tolls on the A22, could lead to “even higher” unemployment levels in the Algarve.

“Algarve entrepreneurs fear that this VAT increase could bring serious problems to the tourism sector. And this certainly means more unemployment,” António Pina told Lusa news agency.

“Our industry is facing tolls on the A22, an increase of VAT from 13% to 23% in the restaurant sector and also a possible VAT increase in the golf sector. If all these measures are put into place, they will seriously affect businesses in the region.”

The president of the association of Algarve hotels and tourist accommodation (AHETA), Elidérico Viegas, told the Algarve Resident: “The VAT increase predicted for 2012 will mean fewer domestic tourists visiting the region, which could represent a reduction of as much as 20% in comparison to the current year.

“Also, the Christmas and holiday subsidy cuts proposed for 2012 (see pages 12 and 13) and the imminent tolls will have an immediate negative effect in the region with a drop in the number of Portuguese choosing to holiday here. Many companies in the sector will have to close their doors and the unemployment rate will skyrocket.”

During a meeting in Lisbon, the Portuguese association of hotels, restaurants and related businesses (AHRESP) outlined a series of measures should VAT increase in the restaurant sector. These include the suspension of promotion of Portuguese cuisine and national products and the organisation of a National No Restaurant Day in a bid to protest against the measure.  

Members of the AHRESP also decided to seek a meeting with Prime Minister Pedro Passos Coelho to discuss the situation.

According to AHRESP, tourism represents 43% of Portugal’s exports, 14% of Portugal’s GDP and is the fourth largest employment sector, representing 17% of jobs in the country.

AHRESP president Mário Pereira Gonçalves said: “Any VAT increase in the restaurant sector would lead to a reduction in competitiveness in the tourism industry and the shifting of tourists to other tourism destinations.

“This will worsen the economic situation, reduce productivity and consequently lead to the closure of thousands of businesses as well as throw thousands of people into unemployment.”

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