Last-minute plea to repeal departure tax hike

Travel agents have made an eleventh hour appeal to the government to repeal the increase in departure taxes, which they fear could deal a blow to outbound travel.

Travel operators have reported a drop in bookings for the first two weeks of August - the controversial tax increase of Lm10 comes into effect in 13 days' time, raising it to Lm20.

Maltese outbound passengers now have to fork out more than Lm40 in local charges for European destinations, making the Maltese the highest taxed passengers in Europe. The charges also include an additional fuel surcharge of Lm7 introduced last week, a passenger service charge and a security charge.

The hotchpotch of taxes sometimes even exceeds the actual travel fare.

The Federated Association of Travel and Tourism Agents (FATTA) last night made a last-ditch attempt to force a government rethink on the issue during a meeting with Prime Minister Lawrence Gonzi and Parliamentary Secretary Tonio Fenech.

It was also learnt that FATTA lodged a protest with the EU last week complaining that the tax was discriminatory.

The association also claimed that the tax is putting local agents at a competitive disadvantage should they want to team up with foreign tourism agents to promote Malta as one leg of a twin destination.

Contacted yesterday, MEP Simon Busuttil said he still believed that the departure tax was incompatible with Malta's obligations as an EU country.

"I've given the cue, but now it's up to the interested parties to take the matter forward," Dr Busuttil said.

FATTA last month also filed a judicial protest claiming that the way in which the Lm10 increase in passenger service charges was being imposed was unacceptable to travel agents, operators within the local market and members of the association.

Although as an EU member, Malta had the right to draw up laws and regulations governing taxes, FATTA argued that the way in which the passenger service charge had been increased was in breach of European laws that regulate fair competition and freedom of moment.

FATTA president Ian Tonna said the number of outbound bookings for the summer season was already facing a decline - especially since the doubling of the departure tax coincides with the most popular month for travel.

Mr Tonna said the authorities were seemingly blind to the fact that the tax could affect the outbound charter market.

"Even a shortage of 10 passengers could be critical to the viability of certain routes," he said.

Mr Tonna fears that the hefty taxes have already started a price-dumping exercise. In a market of tight profit margins, he warned, some operators might soon be driven out of business.

Both Hamilton Travel and Mondial Travel reported a drop in bookings for the first fortnight of August, though reservations for later in the month have picked up.

"At some point these charges have to stop because this situation has become nothing short of ridiculous," Norman Hamilton of Hamilton Travel said.

At the going rate, travel could soon become unaffordable for families, he said, especially for those at the lower end of the salary scale. At the going rate, a family of four will be forking out up to Lm208 in taxes and charges alone.

The least the government should do is exclude minors from the tax, or create different tiers of tax, travel agents said.

Travel agents appear to be in agreement that the government should instead levy a flat Lm2 tax on all travel - both outbound and inbound - instead of "fleecing" the Maltese.

Martin Degiorgio of Mondial Travel said that a reasonable tax across the board would net the government the same revenue and it would go unnoticed. In the process it would also rid the Maltese of the reputation of being the most heavily taxed passengers in Europe, despite living in a country which relied on air travel.

Mr Degiorgio does not believe the tax will have such a major impact on outbound travel, but said it was becoming increasingly evident that the Maltese were shifting towards cheaper destinations.

Travel agents have reported an explosion in bookings to Tunisia, which was providing travel and accomodation fares at give-away prices.

Britannia Travel managing director Noel Farrugia reported an overwhelming number of bookings for July, as holiday-makers appeared to have moved their trip forward to avoid the tax.

"Of course people are complaining about the hefty taxes and are claiming discrimination," Mr Farrugia said.

Parliamentary secretary Tonio Fenech said the government intended to monitor the tax to see what effect it would have on outbound travel.

The unpopular budgetary measure is expected to contribute Lm3.8 million to the government's coffers.

Insisting that the tax was in line with EU policy, Mr Fenech said it would be insane to take on the suggestion of taxing tourism, when the government was doing its utmost to reduce charges for such an important sector.

Neither was it advisable to create different tax structures for travel as these would become too complex to administer.

"We recognise the concerns of people but ultimately we believe travellers budget for such a tax.

"The easiest thing would have been to increase general taxes, but we have opted for a charge which we believe would impact as little as possible the economy," he said.