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Unfortunately the burden is carried by the retailers and services not the government.
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Not exactly true. The government allows business owners to deduct the discounts given from their annual taxes. That's why most places ask for your pensionado tarjeta, write down the number, and make you sign a form -- it's their paper trail for tax time. Still, I think it's a bit insulting to watch a wealthy ex-pat demand his/her discount on a $1.50 breakfast at Niko's...