Tourism account welcomed

The Malta Association of Incoming Tourism Travel Agents has welcomed the government's initiative to set up a tourism and culture account and direct VAT coming from the tourist sector to this account.

However, the association said it was deeply concerned by the minister's "misleading" statement that VAT on tourism had not been raised.

"The truth is that VAT on all tourism services other than hotel accommodation has been increased by three per cent and the association fails to see how the government can be confident that this will not have any negative effect on tourism," it said in a statement.

It complained that the government continuously ignored the fact that tourism services were contracted up to 18 months in advance.

"Tourism agents are therefore in the unenviable position of having to absorb the increase in VAT throughout 2004 in order to honour their existing contractual obligations with their principals abroad."

The Malta and Gozo Restaurants Association said the increase in VAT would not solve the government's deficit and could lead to more tax evasion.