Departure tax hike labelled anti-competitive

Tourism operators have welcomed the budget's incentives to boost international conferences but travel agents have slammed the Lm10 increase in departure tax as "anti-competitive" and a possible threat to low-cost airlines.

Reacting to the budget announcements, the Federation of Associations of Travel and Tourism Agents welcomed the government's decision to set up a scheme to refund VAT paid by international conference organisers. Such a scheme should assist in making Malta more competitive as a venue for international conferences, it said.

FATTA also welcomed the government's commitment to improve the environment and to increase its support of Heritage Malta. These commitments would contribute to improving Malta's tourism product.

The decision to retain VAT at a reduced rate of five per cent on hotel accommodation was a further endorsement of the government's positive approach towards tourism in general and particularly towards Malta's competitiveness in this industry.

However, FATTA feels that this approach should have been extended to all other tourism related services such as local excursions, car rental, transportation and restaurants. Reduced VAT on ancillary tourism services is no new concept and is implemented in a number of competing destinations in the Mediterranean, it said.

On the other hand, FATTA said it was dumbfounded by the decision to increase the departure tax by a further Lm10, to about Lm20. While this increase is unlikely to affect business travel, it will certainly serve as a disincentive for families to travel on leisure.

"FATTA views the departure tax as unfair and discriminatory for Maltese residents and has long been lobbying for its removal. On the contrary, the government seems intent on consolidating the position of Maltese residents as by far the most taxed travellers in the European Union."

The increase in departure tax could also act as a disincentive for low cost airlines to operate to Malta as these also rely on attracting local business, FATTA said.

On the other hand, the association said this may be part of a government strategy to create artificial anti-competitive (or protective) measures to boost business for companies such as Air Malta and Maltacom. The three per cent tax on mobile usage can only "support" this idea.

FATTA criticised the government for continuing to avoid dialogue with smaller constituted bodies "but merely uses them for political propaganda when needed".