So the Madrid government has decided to take legal action against the proposed tourist tax which the local government wants to introduce. This basically means that the controversial surcharge, will be well and truly buried in the Spanish judiciary for many years. The tourist industry has given a sigh of relief. The central administration believes that the tax is illegal and shouldn't be imposed. But there are two aspects of yesterday's development which I find interesting. Firstly, why has the central administration taken so long to take action, the tax has been on the table for almost two years? The threat of its introduction has already affected bookings in Germany and possibly in Britain as well. Secondly, the local government knew that the central administration would contest the surcharge in court, so why didn't they abandon it or have a re-think? I think here we are seeing a clash of two wills from two different sides of the political spectrum. The central administration in Madrid is conservative, the local government is a socialist/Nationalist coalition. The local government has dedicated a sizeable part of its two years in power to the tax, which could now never be introduced. The tax has also caused a major split between the tourist industry and the local government.
So yet again we have seen a key piece of local government legislation stalled. Balearic leader Francesc Antich can blame Madrid but at the end of the day the tourist tax legislation has been a complete waste of time and effort. It has also caused plenty of harm. Unfortunately the losers, as always, will be the small businesspeople involved in tourism, whose firms will suffer from a drop in bookings from a tax which will probably never be introduced.
The rate for the job?
This week's report in Management Today, on how executives and workers are rewarded for their efforts in various countries, shows that in Britain, whatever the Labour government may say, the rich are getting richer and the poor poorer. British executive pay has soared by 29 per cent in the past two years to give chief executives on average a £509'000 pay packet - more than £100'000 ahead of the average in every other European country. They get 33 per cent more than their French counterparts, the next highest paid, and are 40 per cent better off than their colleagues in Germany.
At the same time, however, UK manufacturing workers find themselves at the bottom of the European league table with an annual average of £20'475 compared to £26'124 in Germany and £31'603 in France - while working longer hours than the others. The Prime Minister and his Chancellor of the Exchequer are frequently heard saying that they want to encourage people to earn more at all points in the pay scale but Management Today's figures show that this is not happening. The increasing gap between the better and worse off, especially when compared to that in other countries, shows that in general British management knows how to take care of itself but not of its employees. The discrepancy is made all the worse by increasing evidence that often the financial packages enjoyed by chief executives and others near the top of the tree are not closely related to performance. Against this background the quiescence of the British trade unions is surprising and unlikely to last.