Increases add to travel agents’ woes

by David Kelleher

Travel agents were fuming yesterday as they added up the bills they will have to pay this year in added VAT charges and increased contributions to the Malta Tourism Authority.
As of 1 January, all travel agents are now charged VAT on their mark-up on tickets as well as on all
services they offer. However, they have just been told that their contribution to the MTA has been, in some cases, increased more than three-fold.
Travel and tourism agents yesterday told The Malta Business Weekly that this double-blow would only further hamper prospects for the local tourism industry and described the added increases in contributions as “an extra tax outside the budget”.
Travel agents are so exasperated that the Federation of Associations of Travel and Tourism Agents – Malta (FATTA), withdrew its nominees from the main board of the MTA and the authority’s respective directorates.
In a statement issued yesterday, FATTA said that following an urgent meeting of the council on Tuesday, “the council has decided that in view of the lack of consultation by the MTA, supposedly a public/private partnership, and the exorbitant increase in fees being imposed on all our members, the Federation was withdrawing its nominees from the main board of the MTA and the authority’s respective directorates”.
FATTA added that “the federation is considering withdrawing its collaboration with the MTA in other areas as deemed fit until such time as the situation is remedied”.
Contacted yesterday Joseph Borg Olivier, President of FATTA, said that the contributions issue must not be confused with VAT being charged to ticket mark-up and other services.
“Our main objection to the increases in contributions to the MTA is that they are exorbitant and at no point were we consulted,” Mr Borg Olivier said.
“We agree that the fees had to be revised but not to this extent. In some cases, fees have more than tripled because now each travel agent’s ‘department’ is being charged,” he added.
The travel agents are arguing that if an agency caters for incoming, incentive travel and groups, it will have to pay fees according to the
category of service offered, thus a marked increase in the contribution to the MTA.
They are also against the increases because they have been introduced at a time when the tourism industry as a whole is seeing a decline in the number of visitors to Malta.

“It is already hard enough to have to pay VAT on a wide range of
services offered by agencies but to increase contributions to the MTA to such an extent has only made it worse,” Mr Borg Olivier said.
The chairman of the Malta Tourism Authority, Dr John C. Grech told The Malta Business Weekly that the increases were not exorbitant.
“They are not exorbitant at all. I think it is a big shame that they (FATTA) took this stand. All consultations took place within the MTA and we have tried to be as fair as possible,” Dr Grech said.
He explained that when a report on the economic impact of tourism on the country, the MTA carried out a re-weighting of the contributions paid to the then NTOM, now MTA.
“Our aim was to spread the increase across the board. The contributions had not been revised for the past 16 years. The government has promised to contribute over Lm8m for the next four years, we are getting substantial help from Air Malta to the tune of Lm300,000, and last year Malta International Airport also did its part. We felt that the rest of the private sector could do so as well,” Dr Grech said.
The MTA chairman added that no one likes having to pay. Yet just as tourism was going through a bad period, the country needed to reposition itself worldwide and this exercise costs money.
The President of the GRTU’s Leisure and Hospitality division, Philip Fenech, said yesterday that the increase in contributions would have a negative impact on the industry and that rather than receiving, the MTA like other industry organisations, should help out and even provide subsidies in some areas.
He added there was a limit as to how much the travel agencies could contribute.
“The tourism industry does not benefit from certain incentives that other industries do. When one adds up the amount of money that the tourism industry gives through indirect and direct taxes, the figure is much more than any other contribution,” Mr Fenech said.