The Association for Catering Establishments expressed concern over Clyde Caruana's ruling out of tax cuts sought by some business associations to cushion the inflation blow.
Speaking in parliament during the opening of the debate on a bill to implement budget measures, the Finance Minister on Monday referred to calls by ACE for a reduction of VAT. He said the Chamber of SMEs (formerly the GRTU) had also called for VAT to be lowered to 15% to address inflation.
Caruana said he had nothing against business and their growth. Had that been the case, the government would not be giving the generous subsidies on electricity and fuel that no other government was giving.
But such associations needed to think deeply about the drop in profitability their members said they were suffering.
On Saturday ACE said Caruana had claimed Malta has the second lowest VAT rate after Luxembourg, "ignoring the fact that most EU countries have variable VAT rates for different criteria, particularly food in restaurants".
Malta, ACE said, had the sixth highest VAT rate on food in restaurants within the EU, superseded only by Denmark (25%), Estonia and Slovakia (20%), Latvia and Lithuania (21%).
Malta's VAT was meanwhile the highest in the Mediterranean region: Croatia (5%), France (6%), Cyprus (9%), Italy and Spain (10%), Portugal and Greece (13%).
The association noted that in 2019 Greece had slashed its VAT rate from 24% to 13% to stimulate economic growth.
"It was also ironic for the minister to advise local businesses to look outwards rather than inwards, considering that foreign-owned restaurants investing in Malta are incentivised by falling under the 1/7’s tax bracket at 5%, while the Maltese entrepreneur investing in the same business models must pay 35%.
"ACE acknowledges and supports the energy subsidies which apply to all commercial industries. However, it underlines that global inflation has heavily impacted local eateries in contrast with Mediterranean counterparts."
It added that Malta imported more than 70% of its food products while competing countries such as Italy, France, Spain, and Croatia imported an average of not more than 10%.