Hoteliers, agents, urge government to reconsider 'bed tax'
The Malta Hotels and Restaurants Association and FATTA, the grouping of Incoming Tourism Agents and Destination Management Companies, have urged the government to reconsider the introduction of the tourist guest night tax.
Finance Minister Tonio Fenech said yesterday that the 50c per night tax on each bed night in hotels will not be postponed again and will be introduced as planned in April.
The MHRA said the tax would come at a time when tourism was faced with uncertainty resulting from the 50% rise in utility tariffs, which would precipitate further the problems the tourism industry was currently facing.
"Not only does this tax discriminate against tourists staying in hotels and licensed accommodation, but we cannot understand how the government last year decided to postpone the introduction of this tax on the basis of the economic scenario affecting the industry then, and than decides to introduce it now, when the situation is not any better," MHRA president George Micallef said.
"The MHRA is convinced that the situation will only worsen if the government goes ahead with the increase in utility rates as announced, as the increases are too substantial, and are simply unsustainable."
The association said it strongly disagreed with the Minister of Finance's choice of words when he said that government subsidised tourism by €33,000,000.
"This is not a subsidy at all as money spent on tourism is an investment which reaps substantial returns for government, and is certainly not a subsidy to industry. After all it is not only hotels that gain from tourism revenues but the whole country. Suffice to say that despite the fact that 2009 was one of the worst years in tourism, it is calculated that government will earn €115,000,000 from tourism activity alone, not including other earnings generated through the multiplier effect," the MHRA said.
It called on the government to seriously evaluate the adverse effect that these increases would have on the tourism industry and review its position before it was too late!
FATTA said it acknowledged that the government needed to recoup money to reinvest in the tourism industry. However, the gvernment’s return on its investment came from VAT and other direct taxes generated by the tourism industry as well as from income tax generated by employment within the industry.
"When tourism performs positively, government’s revenue from VAT and taxes naturally increases and government should therefore be more focused on ensuring that the industry speedily emerges from the current crisis."
"The uncertainty surrounding the application and collection of the room tax is as much a deterrent to positive performance as is the tax itself. Hotels have generally contracted rates for Summer 2010 and now even for Winter 2010/11 without including or even mentioning the room tax. Overseas tour operators have priced their packages based on these contracts and are selling to consumers accordingly.
"There is no clear plan on who is going to pay the tax, how or when. This is exposing tour operators to potential claims under the package travel directive. It is a pity that, as usual, the shots are being called by technocrats who simply have no idea of the dynamics of the industry, nor of the time lines involved.
"A lag of twelve to eighteen months (depending on the time of introduction) is required for procedures and structures to cascade down to the consumer prices and the introduction of any structure is not complete before its implementation is clearly defined," FATTA said.
FATTA said the government was 'misleading' the public and trying to be sensational when it claimed to be subsidising tourism by €33 million a year.
It was also misleading when implying that the €5 to €6 million a year being paid to low cost airlines was all part of subsidising tourism.
"In fact, between 35% and 50% of this is actually going towards subsidising Maltese outbound travellers. Government would do well to carry out more detailed research to accurately determine how much of its “investment” in tourism is actually leaking out of the system rather than relying on the unfounded declarations of the beneficiaries themselves who have a direct interest in playing down the volume of this leakage," FATTA said.
It warned that 2010 is poised to witness the departure of at least one other legacy airline and a further increase in the dependence on two major low-cost airlines to an unhealthy level.
See also
http://www.timesofmalta.com/articles/view/20100105/local/50c-bed-tax-will-not-be-postponed-again
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Vince DeBono
Jan 5th 2010, 21:51
If guests are billed direct for room + other services and VAT added PLUS this tax at the end computed separately, then clients pay 50c/night.
If they are to include this tax as part of the overall bill and then add VAT (as all other items are computed usually), then the money paid is SLIGHTLY more.
If a local operator sells hotel accomodation to a foreign TO, the tax is taken into account abroad, profit mark-ups and foreign taxes will push up the actual price paid by the visitor. More like a holiday price increase of €1 per person per night. A couple with children coming for a week will see an extra €28 on their holiday bill ...
Frank Said
Jan 5th 2010, 20:52
What difference does it make for the tourists in paying 50cents more daily? It is not the 50cents that deter tourists but the exaggerated prices the hoteliers and the restaurants charge. To mention but one example, a glass of wine, half full mind you, is charged at six euro!!!
Moses Mula
Jan 5th 2010, 20:28
@Ron Saliba, and what about a family with four kids? That is 21 euros per week. Like tourists don`t already pay for more than they get. Bus fares, restaurants and such already cost as much as most other European holiday countries. In fact I have made a budget for my three week stay in Malta in July with my daughter and girlfriend and compared it to a similar one in Spain. Guess what, it would be cheaper in Spain. Now of course I will still be visiting Malta whenever I can make time and afford it for the simple reason that I am Maltese, but what about the other thousands and millions of tourists? With all respect for Malta and the Maltese a large percentage of tourists would prefare to holiday in Italy, Spain and all the other countries who offer the same or cheaper prices plus more to see. If one does not take care of the tourists we will keep getting the brits who see Malta as a second home and thus will not spend as much as the rest.
laurence schembri
Jan 5th 2010, 19:59
It all boils down to Joe Public, we have to pay these hikes too E&W plus drainage tax, the difference is, Retaurants, Hotels, Importers,Grocer Shop, etc., etc.,can pass it on the the customers, so we will end up paying for the lot.
A steady pair of hands to fish out the dosh out of your pocket.
Urge this administration that if it cannot run the country they should go.
Gordon Farrugia
Jan 5th 2010, 19:29
@Ron Saliba it definitely mades a difference because this is just one of the taxes imposed on the tourist industry - if you add all these charges together they make the cost of a holiday package to Malta very much more expensive than our competitors. And since this is a fixed tax which the government has imposed there's no way of reducing it. Not to mention that there's only so much that hotel staff can do to improve their offering....
Mario Farrugia
Jan 5th 2010, 19:24
@Ron Saliba, D. Dalli, U. D'Amico.
It is painfully obvious that all you gentlemen have absolutely no knowledge or experience in the subject matter which you have so presumptiously decided to write about. Or else, if not that, you must be brainwashed PN diehards who will believe anything their beloved party says.
Facts are these: our tourism industry has long been "directed" by technocrats who, as the MHRA president very well puts it, simply have no idea of the dynamics of the industry, nor of the time lines involved. Sheer arrogance from the part of PN ministers is the order of the day. I cannot comprehend finance minister Tonio Fenech's conviction that this additional tax will not further harm our tourism industry. Maybe he should come down from his high throne for a while and join the "front line" to see with his own eyes the sheer lunacy of his arrogant decision.
Finally, for those who argue that such a tax does exist elsewhere, can they please enlighten us as to WHEN this tax was introduced in these other countries?? Surely not now? If anything, other countries are presently reducing financial burdens, not adding to them.
Tim Pace
Jan 5th 2010, 19:13
One other point I would like to make and this has nothing to do with partisan Politics:
If we keep putting more pressure on our Tourist-based economy and nothing is done to make Malta a competitive destination, then we can wave good bye to it! I would like to see what will happen then, it will take years if not decades to re-attract tourists back to Malta. In the mean time what is going to sustain Malta? What other sectors are there to replace our tourism and inject money annually into our economy? I honestly have no idea. Will some one please enlighten me? Is it going to be IT projects like Smart City? Agriculture? Fishing? the manufacturing industry? the Free Port? Personally I think its going to take a lot more than these to save our economy. Joseph Muscat, Lawrence Gonzi and the rest of parliament had better pull up there socks and get a move on!!
Tim Pace
Jan 5th 2010, 19:00
Its very easy to claim that 50cents added to bed nights is nothing! I would like to see all of you having to pay 50cents per night more on on your water and electricity bills or added to income tax deductions. Then we will see who will be grumbling!! Now may be all of you have not considered the full scenario- take 356 bed nights in the year - that comes to a total of 178 Euros per year per bed. Take a small hotel that has 50 beds (an average of 25 twin rooms)that totals 8,900 euro. That is not a small amount at all to add to the ussual expenses of running a hotel! Besides this, the tourists who come to Malta these days do not have the same attitude as we Maltese have when it comes to money- 3 Euros for us seems to be nothing but in todays world 3Euro is enough for such tourists to choose cheaper destinations. We also have to understand that most tourist's spending power has decresed greatly and every cent now counts for them!!
R.Zammit
Jan 5th 2010, 18:58
At least after vociferously twisting the governments hand to unfairly subsidise low-cost airlines at the risk of Air Malta's own viability, the hotels will at least be made to put their money where their mouth is...........though this will still not balance the playing field, and can easily kill the golden goose.
Robert Zammit
Jan 5th 2010, 18:50
I can't understand how anyone in their right mind can stick up for a government on this issue or on the utilities issue ? People are blinded by being blue or red here ! I've loads of friends who are not coming as often to Malta because they say it's already more expensive than other places and less fun. Can one imagine how many more won't come with prices going up all the time and hotels having to lower standards to make ends meet ?I think this is just going to put the country deeper in the recession than it is already ! Anyway it's always the same people who never find fault with GonziPN ! Can we not grow up and stop thinking red or blue but more on what's good or bad for the country and the market ??? If this were Spain, France or Italy the people would be in the streets to make their voice heard ! The MHRA, FATTA, GRTU and other organisations should be clamouring for all to go out in the streets and protest !
Dunken Somerfield
Jan 5th 2010, 18:36
Yet again the Fat Cats are up in arms. i say 50 cents tax is not much to write home about, i as a visiter to malta don'e really mind paying the extra PROVIDED i in return receive a good service, that is something that is lacking in your country, sorry but facts are facts. Happy N>Y>
J Farrugia
Jan 5th 2010, 18:32
If the government reduces VAT on hotels then they will themselves pocket any reduction given by the government. That is why the government acceded to the advice given to it by those in the know. When things go up, everyone raises his prices, when there is a reduction, we the people do not see any reduction in the prices paid. So enough crocodile tears from the labour elves and the industry itself. Start by bringing a bit of order in your own business since it is lacking and no one is buying your product.
C.ZARB
Jan 5th 2010, 18:25
The 50c per day will hit a vital sector of tourism, ie those foreign elderly people who come to Malta to avoid their country's winter. Many hotels rely on such type of tourism to survive the winter season and will be hit badly by such TAX.
If the government needs money badly then it would have been better not to increase the MP's salaries in the middle of a recession. Another good idea is to force the MEPs to pay income taxes in Malta rather then pay lower taxes in Brussels.
Joe Micallef
Jan 5th 2010, 17:58
Mario Gellel,
In reality that bird never does the action you so vividly and LOUDLY describe. It is a figment of a Roman writer Pliny the Elder successively made popular by celebrated cartoonists.
Steven Brockwell
Jan 5th 2010, 17:54
what we should be looking at is what is now ,however, what will happen later nobody knows. we all excepted the first surcharge, and from that we have escalated to over 100%. if hotelier except the 50 cents a day. next year it will be 1 euro or more. that is how the gonzi government works. oh its only 20 cents? however before long it will be 2 euros? scam all over is what i see.
and a bank rupt government ????????
Nigel Lawrence
Jan 5th 2010, 17:49
@Ron Saliba
Actually Ron, it is not so much of a rudeness when people write in caps only. It simply demonstrates that the writer has no idea at all on where the upper-case characters should be.
E Gatt
Jan 5th 2010, 17:37
@Mario Gellel
You couldn’t be further than the truth!
The government is getting stick for introducing realistic rates (except for the most vulnerable 28,000 families). Incidentally, the price of oil is up again this week at US$80.
The ostriches you refer to continue to believe that Malta is not an oil dependent country, and where their taxpayer neighbours should pay for their own water and electricity use.
These ostriches must have their heads buried in the sands of Kuwait or some other oil-rich country.
J. Buhagiar
Jan 5th 2010, 17:33
@ Ron Saliba
I hardly ever intrude, and in any case, I happen to support the PN. However by your same reasoing, if as you understand it, "its-noting" ;- then why put it there in the first place.
Why? My friends big trees grow from small once. That is what I have learned. A bottle of gas moved from 5 to 10 in how many months? VAT moved to 18% Drainage tax, is it? Parking tickets, Speed cameras, the list is endless.
None are like water or electricity which rises due to higher oil prices is it?
This is due to that Goverment just wants more and more! Unless Goverments grabs his employees and leads them to understand that they have a BUDGET and that they need to stick to it - same as is in Private Industries; Any goverment will continue to ask for more and more. It was like so 20 years ago and is still like so to date. Pity.
20 years ago I used to complain that the PWD could not even repair a hole in the road properly too! And to day, we still cannot repair holes in our New Roads Now!
Unbelievable! But true.
S Grech
Jan 5th 2010, 17:29
This government has lost his head and that's what he want some people like you who give him your support even when he is totally wrong .I remember not long ago that the other government lost his power because of utility tariffs .
D. Fenech
Jan 5th 2010, 17:26
Since when did the PN government take tourism seriously.
Three and four star hotels have either closed down or are on their knees yet the government is still unaware. Is the government aware that three star hotels are accepting tour operator rates of Euro5 for bed and breakfast while four star hotels are accepting Euro11 for Half board. Bugibba is dead and Qawra is dying. If I were to list all the hotels/aparthotels that have closed down in these areas, the list will be endless.
With due respect to Dr. Demarco, tourism is hardly his strengh and quite frankly, he has no idea how to deal with the seriousnes of the situation. So the easy solution is to blame the recession.
Tour operators and low cost airlines need to be supported in full if we want an all year round industry.
Fabien Sant Fournier
Jan 5th 2010, 17:19
If you are subsidising LCC's why not get them to do your dirty work? and collect this €0.50 pppn. Why should hotels become tax collectors??
Lewis Ellul
Jan 5th 2010, 17:09
@ RON SALIBA ET AL
YOU MUST HAVE HEARD THE SAYING ABOUT THE STRAW THAT BROKE THE CAMEL'S BACK. AS YOU RIGHTLY SAY THIS IS A MEAGER 50 CENTS, BUT WHEN YOU ADD IT UP TO ALL THE OTHER DIRECT AND INDIRECT GOVERNMENT-INDUCED TAXES BEING IMPOSED, THAN NO WONDER HOTELIERS, LIKE ALL MALTESE EXCEPT OUR "ANGLI TAL-FESTA", START FEELING THEIR BACKBONE GIVE IN AND FEAR THE WORST. EVEN YOU CAN PROBABLY ALREADY FEEL THE NAIL LOWER DOWN
John Debattista
Jan 5th 2010, 16:54
@ Ron Saliba. so why introduce it at All ? What Difference does it Make .
mario gellel
Jan 5th 2010, 16:39
@Ron Saliba
YOU SEEM TO KNOW WERE THE CAP LOCK IS,BECAUSE YOU USED IT.
If it makes a diference to the tourists or not, ask them. You seem to be one of those that money is no problem for you.Hope you enjoy them while you can,lol
Karl Abela
Jan 5th 2010, 16:30
@Mario Gellel,
Although I do agree that we can do without this, you don't seem to be aware that hotels pay 5% VAT on accommodation, not 18% like everyone else. A 50 eurocent tax is far better than ,say, a 2% increase in VAT.
In any case, hotels will not cover the cost themselves (as it will run into tens of thousands of euros a year), but will charge this amount directly to the guest during their stay like its done in most Europe.
Most importantly is that this money is reinvested in our infrastructure to better service our tourists.
Gianni Xuereb
Jan 5th 2010, 16:29
Does this tax apply to kids under 15 years of age ?
Clifton Mercieca
Jan 5th 2010, 16:27
Is the tourist that we are trying to attract to Malta the kind that cannot afford to pay an extra 50 euro cents per night? If yes (as the MHRA is saying), we need NOT bother about having a tourism 'industry'. Ara veru t-turisti li qed nigbdu lejna m'huma hadd hlief il-klandestini llegali, fejn ihallas kollox il-gvern... cioe, min ghadu ma jistax jevadi t-taxxi.
John Agius
Jan 5th 2010, 16:26
Our beloved kamekaze government! Thank you Dr. Gonzi. Much obliged.
Ron Saliba
Jan 5th 2010, 16:06
@mario gellel
Do you know it is RUDE to write in caps? With regards to what you wrote, do you know how much 50 cents is? 3 euros for a 7 day holiday. And if you think that 3 euros makes a difference whether a tourist comes to Malta or not, than your head is in the sand and not the governments'
D.Dalli
Jan 5th 2010, 16:05
€0.50 cents per night - taf x'qed tghid? Li forsi turist ser jhallas €3.00 (ca Lm1.20) fuq stay ta' 6 nights.
MHRA what are you people, cheapskates?. I bet the tourists themselves don't mind paying such a measly sum (assuming they get a better product). Remember that most of the time - tourists are not fussed about a €3 increase in a bill which would probably be €1000 at least, but with the bad service hotels and restaurants give them. Take the frequent complaints about hotels taking on rowdy students and ruining tourists' nights.
K.Attard
Jan 5th 2010, 16:01
I don't really know if this government knows what is really going on. But no one has to worry...if we suffer from a reduction in tourism, the government can put the blame on the worldwide recession.
Unlike other countries such as Germany who has decided to reduce the VAT on Hotels & Restaurants, our government is increasing taxes...very well done Dr.Gonzi
John Micallef
Jan 5th 2010, 16:00
Please note i own a block of apartments and here is how the figures have been over the past years - 2007 €28 per person, 2008 €25 per person, 2009 €23 per person and next year we had to reduce further to €17 per person so please tell me Dr Gonzi what shall i do ?
Roderick Micallef
Jan 5th 2010, 15:57
Once again the government has kept his word as regards to competitiveness and sustainability by further taxing the tourism industry with a guest night tax, this is over and above the utility rates which are among the highest in all the EU member state.
The usual reaction we get is 'This tax exists in a lot of places in Europe', well if we only want to follow other EU member state when it comes to taxes Malta is surely doing it spot on. However when we come to compare Malta on other things like for example, wages, road infrastructure, utilities tariffs, renewable energy, equality at the work place etc. Malta is not only far behing from most EU member state but is actually comparable to a 3rd world country.
So once again thanks to this incompetent government that has been in power for over 20yrs the numbers and statistics in 2010 will not only be favourable but will most probably be even worst when compared to 2009, but we know, we know, it's not the government's fault, it's only the recession's fault and I have a feeling we will keep hearing this long after the recession is over. X'par idejn?
mario gellel
Jan 5th 2010, 15:50
DEAR MHRA,WE THE COMMON PEOPLE FEEL YOUR PAIN AS WE KNOW YOU FEEL OURS
BUT DON'T YOU SEE THAT YOU ARE NOW TALKING TO A DEAF GOVT?/?.
AT THE MOMENT,I AM COMPARING THIS GOVT TO THAT BIG BIRD THAT DIGS HIS HEAD IN THE SAND AND THINKS HE'S SAFE WHEN A SAND STORM IS COMMING. DON'T YOU AGREE???
U. D'Amico
Jan 5th 2010, 15:34
50c tax per guest per night is not much at all Mr Micallef don’t worry. It will be too much if the price increase is more then 50c, as most hotels will do, blaming it on the government.
If most of the complaining hotels and restaurant provide the appropriate service (not more, just what they say they offer) and live up to their qualification standard, this would not be an issue.
This tax exists in a lot of places in Europe, and is generally billed as a separate Item in the bill. That way, the hotel can be as cheap/expensive as they want, and the government part is clearly marked.