EU Commission and Maltese MEPs disagree over departure tax

The recent doubling of the departure tax for passengers flying out of Malta is still being opposed by two Maltese MEPs even though the European Commission's stand is that the tax does not breach EU law.

The hike was announced by the government in the last budget, to the chagrin of MEPs Simon Busuttil (PN) and Joseph Muscat (MLP).

Replying to a parliamentary question submitted by Mr Muscat, Commissioner Laszlo Kovacs, responsible for taxation, made it clear that the departure tax issue is up to the national government to decide as there is no community legislation covering this area.

The commissioner said: "It is for individual member states to lay down, if they so wish, national provisions for the taxation of departing passengers by air or other means of transport. However, such provisions must be in line with the general principles of the EC Treaty such as respect of the non-discriminatory principle and in particular should not lead to border-crossing formalities between member states".

The Labour MEP had asked the Commission to give its opinion on whether the steady increase of departure taxes by national governments, such as Malta, hindered the free movement of persons within the EU.

In his reply, Mr Kovacs did not refer directly to Malta. He explained that the imposition of an air departure tax is often related to and justified because of the cost incurred by national authorities for the construction and upkeep of airport infrastructure in cases where such costs are borne, directly or indirectly, by the authorities.

"In any case, it is within the competence of national or local authorities to decide whether such a charge is to be levied and, if so, to set its level," Mr Kovacs said.

Contacted for his reaction to this reply, Mr Muscat said that as expected the answer confirmed the Commission's position on tax issues. Nevertheless, he said, he intended to continue following the matter given Malta's insular and peripheral geographic position which makes air links an essential component to achieve freedom of movement.

The head of the Nationalist delegation to the European Parliament, Dr Busuttil, said he did not concur with the Commission's answer and reiterated his position that the government should revise the tax.

He told The Times he does not think that, in its reply, the Commission was saying that the departure tax imposed in Malta is compatible with EU law. "What it is saying is what we already know, namely that it is within the competence of national governments to decide whether there should be a departure tax in the first place and at what rate."

However, that was not the point at issue, he said. "The point is that, in imposing such a tax, the national government should not breach EU rules and the Commission itself admitted as much but did not look specifically at the Maltese case."

Dr Busuttil said Mr Muscat's question might have been too generic and it should have asked the Commission to investigate the specific case of Malta and give a reply on that basis. He said that like any bureaucracy, the Commission tends to take the easy way out unless one pushes it into a corner in order to reply to a specific question.

Dr Busuttil made it clear he was sticking to his original position over the issue. "I am still of the view that the departure tax in Malta will, in the form announced in the last budget, fall foul of EU law and should therefore be revised," he said.