Tourism growing despite accommodation tax - minister

Hotels and restaurants continue to see increased business despite the raising of VAT on accommodation, Finance Minister Tonio Fenech said.

Speaking at SR Technics during a news conference on the operations of his ministry within the past legislature, the ministry said that hotels and restaurants were a lobby group whose job was to convince him not to charge them more tax.

However, tourism was registering growth, hotels and restaurants were making a profit and the government could not treat businesses as social services.

He said that in the first four months of this year, Malta had seen as substantial increase in the number of tourists and their expenditure and claims by the Malta Hotels and Restaurants Association and other lobby groups in the tourism industry that operators were making a loss had to be verified.

The minister said he had no regrets about the introduction of the VAT on accommodation and although this was a government induced cost, he preferred such costs which encouraged business rather than no such costs and empty hotels and restaurants.

Mr Fenech also spoke about the situation in Libya.

He said that although the effect of the crisis in Libya was not as major as one would think, there were still companies which had been affected and which were receiving help from the government.

A task force had been set up with Malta Enterprise and companies were receiving assistance through tax rescheduling, for example.

Asked about Air Malta, the minister said that the government had to continue working to get the airline’s feet off the ground in a way that was acceptable to the European Commission.

The government had to evaluate proposals made recently by Ryanair because although low cost airlines were important for Malta, there had to be a balance so as not to make the situation harder on the national airline.

Mr Fenech said that over the past three year, Malta had survived a series of extraordinary crises and continued to experience growth.

Although the situation was tough, Maltese people were not experiencing the same level of unemployment as elsewhere and the country was recovering from measures which had had to be introduced during the financial crises, such as four-day-weeks and reduced overtime. At the same time, the country had continued to attract investment and be competitive while reducing its deficit and public debt.

Mr Fenech said that in three years, 7,521 women had taken up the tax incentive which enabled them to return to work. The microinvest scheme was taken up by 450 companies who invested a total of €7 million and the car scrappage scheme was taken by 1,500 people up to March.

A total of 99 factories had opened or expanded operations in the first three months. Half of them were foreign investment.

The minister spoke on SR Technics, which he said was running a smooth operation. The company already had 150 employees and it was an example of the government’s work to attract investment.

He said that 60 per cent of its employees were former shipyard workers.

A new area linking it to the airport should be opened by the end of the month.

Mr Fenech also spoke about Palumbo, the company which, he said, made the shipyards operation viable.

Parliamentary Secretary Jason Azzopardi said that he would soon be presenting cabinet with a draft bill to amend the law regulating notarial work and reduce abuse.