Provisional injunction against 'bed tax' is revoked by court

A court has thrown out an application for an injunction against the introduction of a new tourism tax, which had been filed by the Malta Chamber of Commerce late last month, holding that the request could not stand as the tax objected to was “fiscal legisltation,” which did not require consultation to be enacted.

In a decree handed down this morning, Mr. Justice Joseph McKeon revoked the temporary injunction he had granted to the Malta Chamber of Commerce, together with seven local companies with ties to the local tourism industry.

Legal Notices 174 and 175 of 2016, by which the 50c tax per night per tourist over the age of 18 years, capped at €5 per visit, were enacted into law had been published on May 20 and had been meant to come into effect on June 1.

The plaintiffs, all small to medium-sized enterprises who represent a substantial chunk of the local tourism operators, point out that 53% of English language students who come to study in Malta are over 18. Of these, 30% reside with one of the 1000 host families registered with the MTA.

The plaintiffs had argued that the sudden introduction of a new eco-tax would hit the tourism sector hard and jeopardise Malta's appeal to the sector, insisting that it was standard industry practise for companies to take bookings and payment well in advance of any arrivals. They feared that the cost of the immediate implementation of the legal notices would have to be absorbed by the operators as it could not be passed on to the consumer retroactively.

The court, in its decree, highlighted that the application was only addressed to the Ministers responsible and not the relative departments – which in itself was sufficient to render the application invalid.

However Mr. Justice McKeon went one further, also pointing out that the regulations under which the legal notices were issued specifically excluded the injunction. The law which required consultation with the stakeholders, specifically excluded its application to fiscal legislation.

The court said that it was in no doubt that the two legal notices were of a fiscal nature.

The court therefore revoked the provisional injunction it had granted.