Departure tax no barrier to travel, government argues

The contested Lm20 departure tax is not a barrier for people to travel, according to the government, which has written to the European Commission insisting that the unpopular tax is in line with EU law.

Parliamentary Secretary Tonio Fenech told The Times that the government has given a clear, practical and legal explanation to justify the government-imposed charge, even if it contributes towards making the Maltese the highest taxed air passengers in Europe.

The tax had prompted the Federated Association of Travel and Tourism Agents to lodge an official complaint with the EU in July 2005. The Commission recently initiated infringement procedures against Malta and wrote to the government saying it deemed the Lm20 tax discriminatory on two counts.

The arguments put forward by the EU are two-fold: Firstly it deems it discriminatory that the tax is levied on anybody travelling out of Malta while those taking a "flight" to Gozo are not.

The Commission also believes the tax is making it difficult for the Maltese to provide and receive services.

When contacted, Mr Fenech said the government had explained to the Commission that provision of such services are tax deductable for businesses.

Furthermore, official statistics prove that the departure tax has not affected the numbers of those travelling. Still, the government also informed the EU that it was considering a reduction in the departure tax in the upcoming budget.

"Nobody likes taking unpopular decisions, but there was a deficit problem which we needed to resolve. There are a myriad arguments to make but let's not forget that taxation is a matter of national sovereignty," Mr Fenech said.

MEP Simon Busuttil, a lawyer specialising in EU affairs, thinks otherwise. He recently urged the government to abolish the departure tax altogether or risk having to reimburse all the taxes paid since EU accession. The government's decision to double the departure tax in the 2004 budget was met with a chorus of disapproval as many lamented that it hindered their freedom of movement in an island where air travel is a must.

An exercise scanning 20 countries carried out by The Times, based on Europe's largest low-cost airline Ryanair's website, shows that Maltese passengers on average pay some three times as much in taxes and charges as their European counterparts.

Those buying a Ryanair ticket from Malta pay a steep E93 in taxes and charges for a return flight - nearly double that paid by the second highest, France, and more than triple in comparison to those leaving from Brussels.

Apart from the Lm20 departure tax, passengers have to fork out a fuel surcharge, a passenger service charge and a security charge.