George Micallef, president of the Malta Hotels and Restaurants Association, expressed shock this evening after the Finance Minister announced in the Budget that VAT on hotel and other tourist accommodation would be raised to 7% from 5%.

"We were not consulted at all about it," Mr Micallef told timesofmalta.com.

Referred to references to the association made in the Budget speech, Mr Micallef said the only agreement reached with the Finance Minister was that every tourist would pay €3.5 as an eco-contribution which was to be collected from the airport.

He said the MHRA had been complaining about loss of profitability, and today's announcement was therefore even more of a concern as it would mean that €6 million would be paid from hoteliers' pockets since contracts for next year and in some cases even for 2012 had already been signed.

He said that the MHRA had had a verbal understanding with the minister that it would be given 18-month notice before a VAT increase, and today's announcement, therefore, was of major concern.

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