Travel agents welcome EU decision on departure tax

The Federated Association of Travel and Tourism Agents has welcomed the news that the controversial departure tax on air travel might be cut, FATTA president Ian Tonna told The Sunday Times yesterday.

"Obviously if is reduced, it would be a good thing. If it is abolished, it would be much better," Mr Tonna said.

The EU is to start infringement procedures against Malta after it ruled that the tax on outbound air travellers was discriminatory. Finance Parliamentary Secretary Tonio Fenech on Friday hinted that a cut in the Lm20 tax could be on the cards in the next Budget, although the government is to deal with the tax in a pre-Budget document to be published shortly.

Mr Fenech said that the government had been considering re-examining the tax through its tax review commission. This year the tax was expected to generate Lm4 million.

Originally introduced at Lm10, the tax was doubled in the 2004 Budget as a revenue source. Apart from the departure tax, passengers also have to pay a fuel surcharge, a passenger service charge and a security charge.

The decision was heavily criticised by travel agents and by MEPs Simon Busuttil because it was considered a hindrance to freedom of movement for Maltese for whom it is necessary to travel by air.

Mr Tonna explained that FATTA had filed a judicial protest in the Maltese courts in May 2005 but received no response. The association lobbied the support of MEP Simon Busuttil and Joseph Muscat. In June last year, FATTA legal adviser Michael Tanti Dougall lodged a complaint with the European Commission. For a year, FATTA heard nothing and decided to file a petition with the European Parliament complaining about the delay.

The European Commission has finally written to the government saying the tax was discriminatory because it applied to anybody travelling out of the island but not on travellers flying to Gozo, and that the tax made it difficult for Maltese lawyers, doctors and other professionals to travel to see clients overseas.

"We are pleased to note that our complaint had validity," Mr Tonna said. "We were against the tax from the very beginning. It is affecting consumers negatively and obviously our business negatively. In every month up to April this year outbound traveller numbers are down compared to the same months last year. We were hoping that at some point the tax would be reviewed and maybe waived where children and young people were concerned. It wasn't."

Dr Tanti Dougall explained: "Legally a member state must operate within the framework of the EU's competition law. FATTA believes that the tax is discriminatory because it is imposed on air travellers and not on sea travellers, and it goes against the principles of freedom of movement as stipulated in Articles 81 and 82 of the EU Treaty. The issue became very complicated because it deals with tax, competition and transport issues."

FATTA administrative secretary Edward Paris insisted that the association was not only fighting for the rights of business travellers but for all Maltese travellers.

"No other member state imposes a departure tax on its own citizens. The departure tax is a revenue-generating tax. Essentially it goes against the EU's drive to reform methods of taxation in view of the Lisbon Agenda which is concerned with the creation of jobs because it is negatively affecting the travel and tourism business."

FATTA, which boasts about 55 travel and tourism agent members, is however disappointed that it learnt of the EU's actions against the government from The Times last week. The association has not yet received a copy of the official infringement order and has still to read first-hand what the European Commission has had to say about the matter. FATTA intends to complain through EU channels.