Prime Minister Robert Abela has promised that tax reductions with relation to catering establishments – those promised in the Labour’s electoral programme, will be making a “substantial improvement” to the situation.

Last Saturday, the Association for Catering Establishments (ACE) said that Malta has the sixth highest VAT rate on food in restaurants within the EU 27 members state, and expressed concern over Finance Minister Clyde Caruana’s parliamentary speech where he ruled out Value Added Tax cuts for the catering establishments industry as proposed by ACE in the run up to the Budget speech for 2024.

ACE also said that Caruana, while claiming that Malta had the second lowest VAT rate after Luxembourg, he ignored the fact that most EU countries have variable VAT rates for different criteria, particularly for food in restaurants.

It reminded Caruana that inflation has heavily impacted the restaurant industry, so the VAT reduction would be an appropriate measure in a very peculiar time for the industry.

Asked about this on Monday, the Prime Minister thanked ACE for their work, especially during the pandemic. He said that Caruana spoke clearly, and not in the way some have misinterpreted it.

“Caruana said that there should be tax reductions, those promised in the PL electoral programme. It details on commercial tax reductions, and how the corporate tax rate will be reduced,” Abela said, adding that government is also yet to address personal tax bands.

Abela said he understood the pressures ACE has in its operations, and that they are not “thieves” as some have painted them to be. Restaurant operators also do not have the profits one may imagine they have.

He said that the reality of restaurant operators is that they have large overheads, and the PL’s proposed tax reductions will make a “substantial” improvement to the situation.

On the ongoing works on Paola’s main square, Abela said that it is a project which needs to be carried out, for the benefit of residents and those who use it.