MALTA TOURISM AUTHORITY TO INCREASE PRIVATE SECTOR CONTRIBUTIONS

When addressing a Press Conference to announce a review of contributions which private sector interests make to the Malta Tourism Authority, Minister for Tourism Dr. Michael Refalo and MTA Chairman Dr. John C. Grech explained that they had decided to call the Press Conference primarily to give the background and the reasons why MTA had decided to increase private sector contributions. Minister Refalo said that he had endorsed MTA's decision and given the green light for the publication of the relative regulations in the Gazette.

Minister Refalo recalled that when the National Tourism Organisation Malta (NTOM) was established way back in 1984 it had been endowed with a half a million liri (Lm 500,000) budget which included a Lm 200,000 contribution from Air Malta.

Since then the amount of Government funding has increased and in 2001 the Malta Tourism Authority will receive Lm 8.5 million liri. MTA has assumed NTOMs remit and in accordance with the provisions of Act XII of 1999 has widened its range of functions and activities.

Government is committed to provide an Lm 8.5 million annual subvention to MTA throughout the quadriennium (2001 – 2004). Furthermore Government (through Ministry of Tourism funding) currently services a Lm 2.7 million liri bank loan to make good for NTOMs operational, TOSS sourced, deficit up to the 31^st August 1999.

"Taking into account the Lm 8.5 million receivable in 2001 this administration has increased the level of public sector subvention to NTOM / MTA by over 40% within three years".

The Minister said that other public sector contributors to MTA funds include Air Malta, Gozo Channel and as from 2000, Malta International Airport plc.

"The private sector also contributes to MTA funding but the level of contributions, other than for some minimal rounding up in the late eighties, has remained constant since 1984 and stands at around Lm 300,000 per annum".

The Minister explained that in order to maintain some semblance of relativity private sector contributions would have had to be increased by eighteen to twenty times their 1984 level. However, the exercise, which has taken MTA over a year to prepare, should increase MTA funding by around Lm 600,000 per annum.

The private sector contributions review take into account inflation adjustments, between 1984 – 2000 averaging 2% per annum, increases of Government funding in real terms over the same period at a rate of 11% per annum, as well as current sectoral shares of revenue from tourism as a result of the Economic Impact of Tourism on the Maltese Economy study published in mid-1999.

MTA Board membership during 2000 mainly represented private sector interests and except in a few instances the increase in rates had been discussed and agreed upon with the relative private sector tourism organisations and associations.

The Minister explained that the regulations also contained a number of innovative aspects.

Firstly, in the case of accommodation establishments the contributions now relate to either individual units or to rooms and do away with the previously applied benchmarks relating to number of beds. "Rooms are a more certain yardstick".

Secondly, tourism related operations previously omitted from the list of contributors, such as TEFL and Diving Schools, have been included.

Thirdly, over and above the normal payments leviable on accommodation establishments, Timeshare property owners will pay a further contribution.

However, the most innovative introduction was one which allowed the Malta Tourism Authority to give a 50% discount on the amount due as contribution if payment is made within three months of the date of the relative invoice.

Explaining the system Minister Refalo said that "Practice has invariably and historically shown that private sector operators are notoriously late payers of contributions to MTA. This often causes cash flow problems as well as additional work to MTA's finance division.

To incentivise prompt payment the regulations provide that contributions set as per column two (2) of the schedule can be reduced to the level set at column three (3) if full payment of the desired contribution is made within three months of the date of issue of the relative invoice".

A fourth change relates to different scales of contributions depending on locality. For the purposes of the Regulations, specific areas in Malta and Gozo have been designated as main and secondary tourist areas.

A fifth change relates to the licensing of holiday properties leased to Maltese nationals. A licence fee of five liri (Lm5) per annum has been introduced mainly for inventory purposes. "These properties will be monitored and the normal provisions, which include fines of up to Lm1,000 liri for certain aspects of non compliance will be applied. A license to accommodate tourists also covers Maltese nationals and owners, whose properties are licensed as such, will not be required to apply for this new licence".