Hoteliers dispute MP’s claims of 50c tax’s ‘excessive’ burden

Malta’s hoteliers have taken issue with claims by hotelier and Nationalist MP Robert Arrigo, that the collection of a 50c ‘bed-night’ tax for tourists will create excessive cost burdens on collectors.

The Malta Hotels and Restaurants Association said the bed tax was proposed back in 2011, but only endorsed in 2015 by the government in consultation with the MHRA to address the best way of collecting the tax.

The contribution – projected to raise €6 million – must be paid by all stakeholders offering accommodation services to tourists, not just through hotels, to ensure a same level playing field in the market.

All the money collected through the contribution will be ring-fenced into a fund and administered through a foundation co-led by MHRA, to spearhead product embellishment projects across tourism zones.

“Mr Arrigo also forecasts disagreements between accommodation providers and tour operators as to who should be levied the contribution in cases where contracts have already been signed. This is incorrect as the environment contribution has nothing to do with the package deals, and the accommodation providers are only the collectors in this process, as was communicated in the last budget speech by government,” the MHRA said.

The association said Arrigo’s claim that the environment contribution can cost some hotels €50,000 was baseless. “What Mr Arrigo underestimates is the importance that for the first time such collected money will be ring fenced into a fund which will be managed jointly by government and the MHRA for reinvestment into the tourism sector product.

“The aim of the Foundation will be to identify and drive embellishment projects across tourism zones. Furthermore it is envisaged that it will also negotiate with government the additional contribution that will be allocated from the social fund over and above the amount collected through accommodation.”

The MHRA said this was an important attempt by both government and the oprivate sector to drive joint initiatives for the upgrading of the tourism product financed through public funds.

Incoming tour agents have however expressed disappointment over the lack of consultation with all stakeholders on the introduction of the bed tax. 

The Federated Association of Travel and Tourism Agents (FATTA) complained that the total lack of information on the tax had been inconsiderate, adding that 44% of tourists arrivals came on organised package holidays typically priced many months in advance.

“Tour operators selling such packages are very often committed to honour brochure prices and absorb any additional costs that may be imposed. Although the eco tax was initially announced as a 2016 budget measure in last October’s budget speech to become effective on 1 April 2016, government became involved in long-winded discussions with just one stakeholder on the method of collection of the tax.

“These protracted discussions with the hotel sector resulted in an unnecessary delay in communicating the details to the trade, even forcing government to delay the introduction date by two months from the original plan. The details have now only been communicated to operators effectively giving them less than eight weeks’ notice,” FATTA said.

Although the tax might not have a short term impact on tourist arrivals, FATTA said the insensitivity to the pricing dynamics would not inspire confidence from the affected operators.

“We’re extremely surprised by the unprecedented concession to hotels of a 15% ‘“allowance’ on the collectable tax in the first five months from the introduction of the tax – effectively a commission on tax collection of an estimated €400,000 – €500,000 to the hotel sector, and questions whether this is what prolonged the discussions on what should have been a simple adaptation of similar schemes across the globe.”

FATTA wants the bed tax postponed to November.

“This will make implementation smoother, simultaneously giving time to accommodation providers to make the necessary adjustments to their systems to collect this tax and operators modify their packages to advise clients of this additional cost at time of booking confirmation. FATTA also calls for the withdrawal of any “allowance” on the collectable tax which creates a precedent and unnecessary loophole.”