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News • December 12 2004


Junior minister dismisses Simon Busuttil’s tax objection

Karl Schembri

Finance Parliamentary Secretary Tonio Fenech dismissed Nationalist MEP Simon Busuttil’s objections to the air departure tax hike announced in the budget, saying that government needed to collect more revenue without hurting tourism.
Reacting to Busuttil’s comments given to The Times yesterday, Fenech said government needed to make up for the shortfall in revenue and that by removing the new tax on flights originating from Malta it would still have to impose it on other sectors.
The Nationalist MEP had announced he was building a legal case against the Maltese government as he believed that the decision to double the departure tax to Lm20 went against EU law.
The former head of the Malta-EU Information Centre said the tax breached the Maltese people’s right to free movement in Europe, it discriminated between Maltese citizens and foreigners and it also favoured the cruise liner industry as opposed to air transport.
Contacted by MaltaToday yesterday, Fenech said the government had no intention to tax tourists because tourism “creates jobs”.
“If someone wants to stop tourists from coming here then he is right in proposing tax hikes for them, but that’s not good for the country,” Fenech said. “One has every right to scrutinise this tax legally but nobody should be under the illusion that if we remove it we won’t have to pay it in another way. We won’t have one tax less, just a different one. One may even argue it is favouring tourism to Gozo as against, say Tunisia. The point is that we have to collect tax from the Maltese to address the structural deficit.”
Fenech added that Malta was not the only European country to impose a departure tax and that this had already been approved by the EU in the membership negotiations, even though it is only now that government is discriminating between air and sea travel.
The current taxes put Maltese passengers at the highest end of the scale among European travelers.
Asked whether it made sense for the government to tax Maltese citizens traveling to Europe just when they acquired unrestricted freedom of movement, Fenech admitted this was a valid point but the same could be argued about other taxes.
“I mean, we encourage consumption and then we tax it, we encourage the use of mobile phones and tax the service, we encourage people to work more and tax them on income,” Fenech said. “Unfortunately that’s how taxes work.”
Contacted yesterday, Busuttil said he could either present his legal case challenging the government at a Maltese court or else submit a complaint to the European Commission which would then investigate the tax measure.
“At this stage I’ve built the legal argument against it but I will shortly announce what action I will be taking,” Busuttil said.

karl@newsworksltd.com

 

 

 

 

 





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