MHRA GIGO

The Malta Independent



The first thing I learned about computers was GIGO ` Garbage In Garbage Out.` The first thing I learned about surveys and feasibility studies is that if you tell me what answers you want I can tell you what assumptions to make and what questions to ask.

Both these things were flashed to mind when I read the conclusions of the MHRA studies on the impact of EU membership on tourism.` We could lose revenues up to 19.5% if as non-members we are subjected to discriminatory measures like airport taxes for out-of EU travel, the report concludes.

On the contrary if out of membership we use the flexibility to adopt a zero VAT rate on tourism the remote upside will be just 0.6%, we are told.

`The first thing I learned about surveys and feasibility studies is that if you tell me what answers you want I can tell you what assumptions to make and what questions to ask.` Building doomsday hypothesis on what discriminatory measures could be taken against Malta as a non-EU member is not a realistic way how to measure the impact of the choices in front of us. Because one could equally build hypothesis of the EU, as a single market, extending VAT on internal travelling making travelling from point to point within the EU more expensive than travelling to a point outside the EU. In fact this is more likely to happen than discriminatory measures for travelling out of the EU that will inevitably bring retaliation from non-EU countries that source substantial tourist business to EU countries.

If anyone thinks it strange that EU could take measures that disadvantage intra-EU tourism I can quote two factual existing examples where this is already happening.` No speculation here, just factual reality. The Tour Operator Margin Scheme would involve the imposition of VAT on the Tour Operator margin for travel from EU countries to Malta the moment we join the EU. This could push up the price of a Malta holiday by 2% which if not added to the consumer price will have to come out of the hoteliers` margin.

The other case is duty free privileges. Tourists from EU countries to Malta would immediately lose their duty free privileges once we become members.

Are not these two factual disadvantages worth more than all the speculation of discriminatory measures against us` Is not the risk of single market adoption of uniform VAT rules on internal travelling more real than the risk of discriminatory measures against non-EU members` `Truth is that tourism, like many aspects of our life, depends not EU, membership or partnership, but on our ability and determination to use our resources efficiently and apply them in good priority order.`

After all one has to bear in mind that through non-membership we would retain the flexibility to adjust VAT on tourism to compensate for such discriminatory measures. And if one wishes to know where we would fund such VAT concessions the answer could easily be found from savings in not having subsidise food prices to keep tourist package food cost insulated from the high CAP margins. Out of EU we continue to purchase such staples for the catering industry as meat, butter and sugar at the lowest international prices. ` The biggest laugh however comes when we read that without EU funds we cannot finance road improvements, waste management and heritage site development. Environment Commissioner Wallstrom warning that candidate countries should knock on the doors of their finance ministries for such development seems to leave no impression on MHRA.

Truth is that tourism, like many aspects of our life, depends not EU, membership or partnership, but on our ability and determination to use our resources efficiently and apply them in good priority order.` Labour has always given tourism top priority and this was amply proven between 1996-1998. MHRA like the government seems to have given up on our problems and prefer the discipline of an external agent.` GIGO indeed!