Malta in the dock over departure tax

Brussels has decided to haul Malta before the European Court of Justice over the island's failure to amend the controversial departure tax rule, which the European Commission says discriminates against local passengers.

The decision was taken despite the government's announcement that it plans to abolish the remaining part of the tax as from November.

Commission sources confirmed that the College of EU Commissioners decided to lodge a formal complaint to the court.

"The Commission had already decided a year ago to take Malta to court over this issue. Following discussions with the Maltese authorities we decided to freeze this decision in order to give time to the Maltese authorities to implement the necessary changes.

"A year has passed and still we are waiting for a result. That is why we decided to unfreeze our position and proceed with court action," a Commission official said.

Finance Minister Tonio Fenech told The Sunday Times that the government decided to abolish the tax in November. The timing was chosen to coincide with the change of airline schedules.

A spokesman for the government yesterday insisted that Malta had notified Brussels of its intentions a few weeks ago, adding that it should have solved the outstanding issue by the time the court case gets under way.

The removal of the remaining €23.29 (Lm10) departure tax (halved from €46.58) was one of the promises made in the Nationalist Party's electoral programme.

Currently, the departure tax contributes almost €3 million in revenue to the Maltese tax coffers.

The Commission says the airport tax is discriminatory as it is only levied on air passengers beginning an international journey from Malta. It argues that the current tax structure puts an unfair burden on residents and makes it more difficult for them to receive and provide services in other member states.

The issue was first raised by Nationalist MEP Simon Busuttil who asked the Commission to investigate whether the tax conforms to EU rules.