Brussels steps up action

The European Commission has decided to step up its legal action against Malta over the controversial departure tax levied on passengers starting their journey from here.

Following the first letter of formal warning issued last July, the Commission yesterday rejected the arguments made by the government and opted to continue with the legal process by issuing a reasoned opinion, its second step of legal proceedings. This means Malta now has two months during which to answer before a decision is taken in Brussels on whether the issue should be referred to the European Court.

The Commission deemed the airport tax imposed by Malta to be discriminatory as it is only levied on an air passenger beginning an international journey from Malta airport but does not apply if the passenger starts the journey outside the island. The Commission said the tax puts an unfair burden on residents in Malta and makes it more difficult for them to receive and provide services in other member states. Furthermore, it said, domestic destinations are exempted from the airport tax.

According to the Commission, the airport tax should not differentiate between domestic and other intra-Community flights.

Malta's response to the Commission's first letter of formal warning was sent just a few days after the budget announcement that the departure tax would be slashed by half (Lm10) by next summer.

Commission sources had told The Sunday Times that the reduction of the departure tax would not make any difference to the Commission because "the fact that the tax has been reduced is not relevant to the discriminatory aspect of the passenger service charge". The sources said yesterday a reasoned opinion means that the tax must be removed completely.

The departure tax, which now stands at Lm20, was introduced in two stages over a period of eight years. It was first introduced in 1997 and then doubled last year. It will revert back to Lm10 next summer.