€8.75 million in tourist eco-tax collected since 2016

The government has so far collected €8.75 million as environmental contributions from tourist stays in Malta, but despite the scheme being in its third year, the collection of the tax from a significant portion of operators is still proving difficult.

Since 2016, those offering tourist accommodation have been obliged to collected €0.50c per person for each night, capped at €5.

To make it easier for authorities to know how much they should be collecting, hoteliers and holiday apartment landlords must issue their guests two invoices – one for expenses incurred during their stay, and a second for the eco-contribution.

The fee must be paid every three months and must be submitted to the Inland Revenue Department along with VAT returns for the same period. Operators are also expected to maintain information on the number and age of guests staying with them.

Despite the legal obligation to pay the contribution, the government is not collecting the money it is owed from all operators, which can only increase as tourist numbers continue to rise.

A spokesperson for the Finance ministry told MaltaToday that the amount being collected was “by and large in line with budget” but said there were “still pending issues when it comes to its collection from the operators of private accommodation hosting tourists”.

The ministry said that the Commissioner for Revenue was currently working with both the Tourism ministry and the Malta Tourism Authority with the aim of keeping “the relevant registers of such accommodation updated as well as to make the relevant register information available to the tax authorities in order to combat any evasion.”

According to the figures provided by the ministry, the amount collected in 2016 – the year of the scheme’s introduction – was €1.5 million. This increased to €2.6 million during the whole of 2017 and to €4.6 million in the first quarter of 2018.

A quick look at tourist arrivals in 2017 shows that Malta received 2.3 million visitors who spent a total of 16.5 million nights in Malta.

Assuming that roughly seven in every eight visitors were over 18 – and therefore obliged to pay the contribution – the government should have collected roughly €7.1 million.

If one also assumes that 30% stayed in Malta for more than 10 days – and had their contribution capped at €5 – the total owed to the government goes down to some €6.7 million, which, if extrapolated over the entire period since the scheme has been in place, amounts to €11.7 million.

Add to that nights spent in hotels and farmhouses, as well as any inaccuracies in our calculations and the government could so far have barely collected half of what it was meant to pocket.

The Malta Hotel and Restaurant Association (MHRA) president, Tony Zahra, told MaltaToday that, while the government was collecting contributions, the scheme needed to be enforced more effectively.

He stressed that the MHRA had got behind the government’s plans to introduce the tax on the condition that the proceeds from it went to embellishment projects around the island.

In order to make sure this happened, he said that the MHRA had pushed the government to keep the funds ringfenced at the Inland Revenue Department, and not in the government’s consolidated account.

“We were good enough in negotiating and insisted that if there is going to be an eco-contribution, it must be just that, an eco-contribution,” he said. “We didn’t want a situation like we had with the road tax, which was originally intended to be used for roads, but isn’t.”

He said that while it wasn’t correct to say that the government wasn’t collecting eco-contributions, he said he couldn’t say whether it was collecting all that it should.

“I can assure you that as an association, we are going to be telling the government, ‘you should have collected so much by now, and if you haven’t, that’s your problem because we are not tax collectors’.”

Zahra also said that there were some 110 registered hotels and roughly 1,200 holiday apartments registered with the authorities. The total unregistered holiday apartments, that were likely not paying the contribution, amounted to 3,000, he added. Zahra said that while the MHRA was not troubled by competition from Airbnb and other online booking sites for holiday apartments, the government needed to ensure a level playing field.

“If you’re going to be in business, you must make sure you are compliant. We need better enforcement to determine who is registered,” he insisted, adding that those who weren’t registered and paying their eco-contribution were probably also not paying VAT.

“It’s not rocket science, most of these apartments are listed online so it’s just a matter of taking the list of registered apartments and cross-checking with online listing.”

One way the government is working to address this is by reaching an agreement with Airbnb and other platforms that would allow the contribution to be collected directly by the service provider and transferred to the government.

Last month, Airbnb’s public policy manager, Alessandro Tommasi, said the platform was willing to collect the tax from its hosts and had similar agreement with other countries around the world.

The ministry spokesperson confirmed that talks were ongoing between “the relevant authorities” and “key stakeholders” in order to ensure “comprehensiveness in the collection of the relevant taxes on tourism accommodation” but did not specify further.