Through the budget, the government is giving a clear sign that it looked at the tourism industry as a vital tool for Malta’s economy, the Malta Hotels and Restaurants Association (MHRA) said this afternoon.

It said that the allocation of further funds to the MTA to help market the island, particularly in the prevailing difficult market conditions, showed that the government had understood that investment in marketing reaped the desired returns within a very short time frame.

The MHRA said it welcomed the Finance Minister's statement on the positive effect of low cost airlines on the tourism industry. The association encouraged the Malta Tourism Authority to reach a conclusion on current negotiations with major airlines to take advantage of the benefits of the introduction of new services in the shortest time possible.

“Under the current scenario it is extremely urgent that new routes are introduced without delay,” it said.

The MHRA welcomed the retention of the five per cent VAT rate on accommodation but said that despite its recommendation for VAT rates to also be reduced on restaurants, they remained the same.

The association praised the budget’s green measures and encouraged the government to further reward entrepreneurs who continued to invest in eco-friendly methods.

It welcomed the measures on the changes in tax bands but said it was worried that the cost base of the hotel and restaurant product would be negatively affected with the new electricity tariffs.

The association also expressed concern at the announced €0.50 tax per bed night which comes into force in 2010.