The Malta Independent 9 December 2018, Sunday

Trust Fund intended to administer eco-tax funds was never set up, NAO finds

Tuesday, 4 December 2018, 17:20 Last update: about 5 days ago

A Trust Fund that is intended to administer funds collected from the Environmental Contribution levied on tourist accommodation had not yet been set up by the time an NAO audit was concluded.

The government had announced in the 2016 Budget speech that hotels and other forms of accommodation would be charged 50 cents per night per person over 18 years of age. The tax is capped at €5 per stay.

All revenue generated from this initiative would be directed into a Tourism Environmental Trust.

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The funds would be utilized for projects aimed at improving Malta’s tourism industry.

A revenue estimate of €3.5 million was included in the 2017 budgetary estimates in relation to this Contribution, while the actual amount of €3,395,097 was credited to the pertinent line item.

The Ministry for Tourism told the NAO that the set up of the Trust itself had encountered a number of teething problems, and as at end of September 2018, it had not been established.

The MOT also stated that following legal advice and various consultations, action to repeal the Trust Legal Notice was initiated following Cabinet direction. The Trust was to be replaced by a Foundation with similar functions.

 It further transpired that whilst funds in relation to the EC are being collected by the Commissioner for Revenue, they are eventually held in a Departmental Accounting System (DAS) account pertaining to the MOT to finance related projects.

However, by procedure, during 2017, out of the total EC collected of €3,395,097, the amount of €395,093 that was not utilised by the end of the year was transferred into the Consolidated Fund as revenue.

The NAO recommended that the Tourism Ministry ensure that the correct setup is in place without undue delay so that the funds are used effectively and for their intended legal purpose.

The ministry said it has been working on the necessary steps to repeal the originally intended Trust.

In parallel the MOT is setting up a dedicated internal committee namely the Tourism Projects Advisory Committee, whereby members will be officially appointed and will have their modus operandi regulated by specific Terms of Reference. A cabinet memo for the repeal of the Trust was raised and processed through the appropriate channels ... but the Ministry is still pending the official endorsement note to proceed accordingly prior to the relevant legal publication.

Any unutilised funds transferred to Revenue is a prerogative of Ministry for Finance, however MOT will discuss with MFIN if these can be carried forward to the following year.

For 2018, projects have been planned and are being implemented.

The NAO also found that Enforcement action with respect to the collection of the Environmental Contribution was lacking. A number of discrepancies were traced between the Departmental Accounting System and supporting documentation. System limitations, including a low threshold for payments made through the Government Payment Gateway, and the lack of system-generated reminders, were also noted.

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