Are you asking where to put the towels instead of above the toilet? We would need more information to answer that question.

if you're asking what to put there instead of the towel rack and the picture- i would suggest several small pictures to offset the large mirror and what appears to be a niche on the right.

Yes, you should definitely need to remove that towel bar. It doesn't look good and it is not hygienic. Try to find where you want to hang your towels. a good tip is to use towel hooks.

Look an example from a project we recently did. The client had the exact same problem. Towel racks over the toilet, so we took advantage of that space and designed a niche over the toilet and moved the towels next to the shower door.

So one idea is to do a niche, the other idea is to add 2 or 3 wooden shelves that you can buy at your preferred store and add your beautiful blue decorative piece.

Look at the picture below for this project we did:

Sorry, I should have said those are decorative towels. I have towel hooks for my regular towels. Had these for many years and don't want the towel rack anymore for decorating.

Sorry, Jan. I should have put the lid down. I was in a hurry.

Nice work!