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