Spanish general indirect tax revenues are mostly generated by VAT.
VAT rates on tourism activities are comparatively low with respect to other sectors in Spain,
thus following the usual pattern seen in most countries (see Tables 1 and 2).
However, the reduced VAT rate (7%) levied on Spanish hotels leads to a tax pressure below EU average,
as observed in World Travel & Tourism Tax Policy Center
(2002)where Madrid and Barcelona are ranked 13th out of 18 EU cities
in terms of taxes as a proportion of the total hotel room price.
Furthermore, other tourist-related services (cafes, restaurants) also face a 7% VAT rate,
where the difference with other EU countries is even larger since many of them apply general rates.
Thus one of the primary reasons for the paper, the role of general indirect taxation
of tourism in comparative terms (with respect to other goods and to other tourist taxes),
is even clearer for the Spanish case.