Thursday, 2nd October 2008

Remove passenger taxes to attract more tourists

Adrian Sciberras, Marsascala

With hoteliers worried about the last quarter (September 19), I believe that the euphoria of low -cost airlines is over and the country must now re-think ways to keep growth sustainable.

I am sure the Finance Ministry together with the tourism authorities and Malta's top statisticians can work out an easy exercise whose conclusions would lead to the implementation of this idea: to completely remove the incoming/landing taxes and airport charges for foreigners.

The persons responsible for this exercise must consider the following. Calculate the lost revenue from all these taxes and how this would be offset by increased revenues from increased tourism, i.e. the government will earn more VAT from foreign consumers' spending, businesses will earn money and employ more people, so the government will earn more NI, tax from employees, and taxes on corporate profits. That is the direct benefit, but there will also be indirect demand for more goods and services, such as equipment for new hotels, so there will be a positive ripple effect throughout the economy.

Furthermore, another benefit will be that Malta can be advertised as a tax-free country, a cheap place to travel and take the number one spot in any future Travel and Tourism Competitiveness Report.

If this idea is implemented, the increased tourism gained will make the country busier, and everyone involved in the tourism sector, directly or indirectly, will be better off. It would definitely lead to wealth creation in my beloved country.

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Article © Allied Newspapers Ltd., printed on Sunday, November 8, 2009. This article is for personal use only, and should not be distributed.

Comments

Jean Withers (on 2/10/08)

What planet are you on? Dont you know there is a credit crunch at the moment??? People in Britain and elsewhere are watching the pennies!!

Dominic Newland (on 2/10/08)

Does Malta want to be cheap or high quality? Does Malta want more crowds or fewer people each spending more?

In general removing taxes and red tape are a good thing. However, the statistical excercise you suggest is more complex than you think. If taxes are removed, will airlines and hotels just raise their prices to take the extra share of wallet? How much does each tourist actually cost in terms of water use, power generation, congestion, public order and cleaning? The economists answer to the full supply and demand curve may be suprising. Perhaps fewer tourists with higher revenues from each on balance benefits Malta plc. the most. Perhaps higher taxes spent on quality infrastructure and attractions will result in higher spending repeat visit tourists who recommend Malta to their friends. Is this better than the perpetually insatiable search for more volume of bucket seat beer swilling Paceville goers?