No VAT in French restaurants from July. And Malta?
Value Added Tax on restaurant and café bills in France will fall to 5.5% from 19.6% on July 1, after the industry promised to pass on price cuts and go on a hiring spree. Last March Brussels allowed countries to lower VAT on a broad assortment of services, including restaurants, as part of a broader stimulus package draw up to tackle the global economic crisis.
Malta has not, so far, taken advantage of the change. France, like other countries in and outside the EU, knows that this VAT cut will attract more tourists and more consumers and that this, in return, will result in more jobs and more economic revenue.
France was wise to introduce this move to coincide with the start of the tourist season and the French junior business minister Herve Novelli said that 42% of tourists told pollsters that they were drawn to France because of its cuisine.
But France did not reduce VAT and stop there: it entered into an agreement with the trade representatives that this reduction had to be reflected in the price cuts of the restaurant and coffee shop bills and in more jobs.
As you can note from the table below, many EU countries have lowered VAT on various products in order to shake up the global recession, but in Malta we seem not to take the opportunity in order to help trade and the traders and the consumers. On the contrary we introduce measures which continue to suppress them.
The government came out blowing its trumpet that Malta managed to keep the 0% VAT on food and medicine, but the Maltese want this derogation to be translated into action. What is the point of getting this permission from Brussels when Malta continues to charge 18% VAT on food and pharmaceutical products?
Yes, in case you did not know, we are still paying VAT on pharmaceutical products like gauze. The EU allows us also to reduce VAT on hairdressing because this is considered as an essential service as it is not a luxury to have your hair done but a necessity. But notwithstanding the government continues to charge us 18% VAT.
As if the tourism industry were not bad enough, the government has imposed another tax on every tourist that comes to Malta. Not only that but the Malta Tourism Authority, instead of prosecuting the government for keeping this country in shambles, prosecutes those who are investing in this industry.
And as if this were not enough, they are breaking the law by going against the Data Protection Act and using the data they compile from their inspections in the hotels to testify in favour of any complainant before our courts and tribunals. This is the puerile situation that the MTA is in nowadays – instead of taking a look around and lifting this country from the shabby state it is in, it suppresses the tourism operators in these dire economic situation.
In case the MTA has not noticed, every tourist that comes to Malta leaves with the same remark: Malta is a nice country but shabby; Valletta is nice but shabby. Shabbiness does not need any consultants to be removed: it needs common sense and willpower, the common sense that Dr Demarco only discovered lately when he stated that Paceville had to organise itself in the collection of rubbish!
Eureka! It had to take all these years and Dr Demarco, not the MTA brains, to discover this when all they had to do is to get the information (and for free) from the many Maltese who visit Costa Brava, which is three or more times the size of Paceville, to tell them how rubbish collection is done over there!
But going back to VAT, and irrespective of whether the government shows any sensitivity to the economic stagnation, it is about time that the format of VAT receipts is replaced in order to distinguish the amount paid for the service or the product, and the amount paid in VAT, and not altogether as it is done in this country.
The receipt for a coffee in Barcelona will tell you that you are paying this much for the coffee and this much VAT and in this way you know that, if the government has reduced the VAT, this is reflected in the price.
But in Malta, it is the other way round – we procrastinate on investigations of VAT fraud of millions of euros and leave them in the dark, and expect the humble taxpayer to be a law-abiding citizen!
In case you have not noticed, we have adopted the 18% VAT across the board like Lithuania!
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Last March Brussels allowed countries to lower VAT on a broad assortment of services, including restaurants, as part of a broader stimulus package draw up to tackle the global economic crisis. 
