Government 'not in favour' of reducing VAT on catering establishments

The government is not in favour of reducing VAT on catering establishments, the Prime Minister told Parliament this evening.

He was replying to questions by Opposition leader Joseph Muscat after a statement on the recent EU meeting of heads of government.

Dr Gonzi said the government was keeping its options open but there were many unknowns in the country’s economic outlook. This, he said, was ‘a season full of challenges’ and any decision whether to give preferential treatment on VAT for catering and tourist establishments had to be taken in this light.

The scenario was difficult but, the prime minister said, he was optimistic.

He said the tourist arrivals during the first five months of the year matched 2007 figures but one must still see whether the numbers translated in the same net return for the economy.

The government was exploring all expectations in its pre-Budget discussion.

Dr Gonzi said that last week he had positive initial pre-budget meetings with the MCESD and the Gozo regional economic development council, during which tourism was also discussed.

The government’s attitude had to be based on the country’s resources and how to find solutions which did not necessitate more taxes. More detailed analysis and technical studies of the economy and of the tourist sector in particular were needed.