Protection of competitiveness welcomed

Philip Fenech, president of the hospitality and leisure division of the GRTU, Association of Retailers and Traders, said it was positive to note that the government had heeded the Malta Hotels and Restaurants Association and did not raise VAT on tourism.

This would guard against further erosion of competitiveness, he said.

It was also positive that money collected from tourism would be channelled into investment in the industry. He welcomed the higher allocation of Lm10 million to be spent on tourism over the next four years to further develop the local product.

Mr Fenech asked whether it would have been better had the government tackled the problem of those who evaded paying the 15 per cent VAT rate instead of raising the rate to 18 per cent. "In this way there would not have been the need to increase the VAT rate to the detriment of law abiding citizens who paid VAT regularly and at the cost of eroding competitiveness."

He said he was convinced that those who did not pay the 15 per cent VAT rate would certainly not pay the new rate.

Mr Fenech added that because of the tax increase the government would have to raise wages, meaning that the wage bills of operators would go up.