Tourism Agents slam governments’ blind stand on bed tax

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Tourism Agents slam governments' blind stand on bed taxIncoming Tourism Agents and Destination Management Companies within FATTA are seriously concerned by Government’s blind stand on the bed tax issue.

FATTA acknowledges that the government needs to recoup money to reinvest in the tourism industry. However, Government’s return on its investment arises from the VAT and other direct taxes generated by the tourism industry as well as by the 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. Government is misleading the public and trying to be sensational when it claims to be subsidising tourism by €33 million a year as this is insinuating that nothing is generated by the industry in return.

Government is also misleading when implying that the €5 to €6 million a year being paid to low cost airlines is all part of subsidising tourism. In fact, between 35% and 50% of this is actually going towards subsidising Maltese outbound travelers. 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. It is unfortunate that this leakage is unwittingly contributing to the exodus of legacy airlines and to the negative performance of our home carrier. FATTA warns 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.

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. Finally, Government needs to understand that there are many different sectors that constitute the tourism industry and that subsidies to one particular sector should not be labeled as subsidies to the industry in general as they do not address the problems being faced by all the other sectors. Indeed, other sectors are actually themselves subsidising the Government’s initiatives by faithfully supporting these at costs that are spiraling upwards.

In these troubled times and in the collective interest of all stakeholders in the tourism industry, FATTA appeals for egos to be put aside and for common sense to prevail.

Federated Association of Travel and Tourism Agents Malta

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