Reduce VAT for tourism sector to encourage investment, says PN

Reducing the VAT rate for restaurants, bars and hotels will be a much needed “encouraging sign” to spur further investment in the sector, the Nationalist Party said as it promoted its proposals for the tourism industry.

Speaking at a boutique hotel under the Cittadella in Victoria, Gozo, spokesperson Peter Agius said that reducing the VAT incurred by catering establishments, including those in hotels, from 18 to seven per cent, would encourage renewed investments in a period where the tourist sector needs a sign of courage to return to pre-pandemic economic activity.

“We can only remain competitive if we continue to invest,” he said.

He explained that such a reduction is possible within the derogations allowed by the European Directive.

Among the 100 technical proposals detailed in document ‘2+8 – A way forward to tourism recovery’, the PN is proposing a series of measures designed to alleviate reduced tourist turnover due to the pandemic.

Among these, the PN is proposing a measure whereby the tax due is repaid over five years, to soften the blow on businesses’ cashflow.

Candidate Ivan Castillo explained that investing in hotels of different types helps to diversify the Maltese tourist offer. Therefore, he said, the PN’s proposals also see direct support for hotel upgrades, as well as the promotion of concept hotels targeting a particular sector.

Castillo said that the PN wants the Government to be a targeted marketing partner, with a reimbursement of marketing costs of up to €25,000.

The PN’s proposals also include broader cultivation of the tourist product, in particular by placing the unique character of Maltese towns and cities front and centre through a new ‘National Aesthetic Standard’.

This would promote the gradual creation of picturesque urban areas that are of greater attraction to tourists visiting the Maltese islands.

The document was originally unveiled in April, and contains ideas targeting several sectors within Malta’s multifaceted tourism industry, including support for ELT schools and a waiver on the licenses for vehicles used for touristic purposes.

Speaking to BusinessNow.mt, Mr Agius said that the proposals form part of the PN’s electoral manifesto, but aspects of it may be incorporated in the party’s Budget 2022 document, which is expected to be published next week.