Travel agents ready to take legal action over tax hike

Travel agents are prepared to institute legal action against the government if it fails to revise the controversial air departure rates, The Times has learnt.

The Federation of Associations of Travel and Tourism Agents has taken the cue from Nationalist MEP Simon Busuttil, who built a legal case to show that in its current form, the departure tax breaches the right of the Maltese to free movement under EU law, among other arguments.

The government's decision to double the tax to Lm20 - over and above the passenger service charge of Lm6.52 - with effect from August 2005, makes air travel taxation from Malta the heftiest in Europe.

FATTA secretary Edward Paris said that the federation has requested a meeting with the government to discuss the measure at once.

Should the government ignore the arguments being mounted and forge ahead with doubling the tax, the association is prepared to take legal action to ensure Malta is in line with the EU, Mr Paris said. If this is the case, it will have to be a court to establish the acceptable level of departure tax.

The federation is prepared to rope in the European Federation of Travel Agents to beef up its case against the Lm20 tax, which is to be a major point of discussion during next week's annual general meeting, Mr Paris said.

The government could not keep trying to raise money from travel, when operators were doing their utmost to cut down prices, travel agents lamented.

"As Dr Busuttil rightly pointed out, air travel is an essential part of our mobility. We have to stop thinking that travel is just a market for the rich," Mr Paris said.

Mondial Travel director Martin Degiorgio said that the government should admit that it has breached EU regulations with the tax hike and reverse it at once, without the necessity for anybody to resort to more drastic measures. Mr Degiorgio is a member of the Malta Association of Travel Agents, pertaining to FATTA.

He said the federation could do little before EU membership, but since May 1, the situation had changed.

"FATTA now has an obligation towards both its members and the public to ensure that we are not being discriminated against. We are now by far the most taxed passengers in the EU and something needs to be done," Mr Degiorgio said.

Some travel agents have warned that a number of operators could be driven out of business if the tax goes ahead as planned.

Noel Farrugia, managing director of Britannia Travel, believes there is no alternative but to set the ball rolling and start legal action.

He said many travel agents were surprised at the increase, especially since there had been constant pressure for the government to reduce or even eliminate the Lm10 departure tax, first introduced in 1997.

According to the budget estimates, this year alone the government expects to raise Lm1.8 million in revenue from the tax. Next year it estimates a revenue of Lm3.8 million.

"The outbound travel industry is not a bottomless money pit. The least the government could do is to establish an inexpensive flat tax across the board, without discriminating against the Maltese," Mr Farrugia said.

In his 'Ask Your MEP' column tomorrow, Dr Busuttil will give a detailed analysis of the departure tax and why he believes the way the tax is being imposed will have to be revised.