Government retains departure tax

The government stuck to its guns and did not revise the departure tax yesterday despite threats of legal action from the EU, which deems the tariff discriminatory.

In last year's budget, the tax had been halved from Lm20 to Lm10 - coming into effect as from July this year - following the European Commission's stand against the tax.

However, the EU is still not happy with the situation and this July rejected the government's arguments, made in response to two of its legal warnings, and even threatened legal action.

The Commission primarily argues that the tax is discriminatory given that only outgoing travel is taxed, a position which is echoed by travel agent representatives.

Should the European Court find in favour of the Commission's position, Nationalist MEP Simon Busuttil said a few months back, there is a chance the government would have to return the tax it had collected from it over the years.

In 2005 alone, the measure generated some Lm3 million, growing to Lm4 million last year.

Originally, the Labour government in the 1997 budget increased the airport tax from Lm4 to Lm10; the Gonzi Administration, however, doubled it in the 2004 budget, only to go back to the 1997 Lm10 fare earlier this year.