Departure tax cut welcomed but still considered hefty

Operators have welcomed the Lm10 reduction in the departure tax but are insisting it is still hefty for an island totally dependent on air travel.

Travellers heaved a sigh of relief on Wednesday when Prime Minister Lawrence Gonzi announced the government would be halving the unpopular Lm20 departure tax. Still, faced with a Lm16 fuel surcharge, a Lm10 departure tax, a Lm6.80 airport tax and a 98c security tax, air travel remains far from cheap.

The president of the Federated Association of Travel and Tourism Agents, Ian Tonna, said the reduction was a step in the right direction but it was clearly not enough.

"We believe the tax is irregular in its entirety and so there should not even be a 1c charge," Mr Tonna said, adding that his association still intends to pursue the case against the government.

The increase in departure tax in the 2005 budget had prompted FATTA to lodge an official complaint with the EU in July last year. The Commission recently initiated infringement procedures against Malta and wrote to the government saying it deemed the Lm20 tax discriminatory on two counts, though Parliamentary Secretary Tonio Fenech insisted the tax was in line.

Mr Tonna believes the decision to introduce the reduction from next summer means seat capacity could continue suffering in the shoulder months.

MEP Simon Busuttil, who was the first to question the legality of the tax when it was introduced, welcomed the reduction.

"This shows the government is receptive to the strong concerns raised by citizens on this issue and respectful of their rights as EU citizens, in particular their freedom of movement," he said.

The ball is now in the European Commission's court to determine whether reducing the tax to Lm10 is sufficient to consider the tax as compatible with EU law and therefore to close infringement proceedings.

"I look forward with interest to the Commission's assessment," he told The Times.

Dr Busuttil has often written that, in its current form, the tax is incompatible with EU law and must therefore be revised or removed altogether.

Labour MEP Joseph Muscat believes the tax reduction came about too late.

The Commission is now not only investigating the amount of tax but its entire concept and whether it acts as a barrier to freedom of movement and services, he said.

Leading travel agent Norman Hamilton said he was expecting the departure tax to be completely waived, failing which the government could have introduced the reduction at once and cancelled the tax on children.

Mr Hamilton also asked why the government had not even contemplated the elimination or even the reduction of the Lm10 tax for those travelling by sea.

"Not enough has been done to entice the Maltese to travel more," he protested.

Air Malta said the tax cut will definitely compliment its efforts to continue lowering prices and should be a further boost to initiatives similar to the successful 'Spread Your Arms and Fly' campaign.