Revealed: Hotel lobby MHRA is getting a cut from tourism eco tax

Malta’s hotel lobby, MHRA, is helping administer the government’s eco tax under an unprecedented agreement signed before the last general elections and approved by Finance Minister Clyde Caruana, The Shift can reveal.

The financial terms of this unpublicised agreement remain undisclosed. The association has acknowledged that the arrangement could generate a financial benefit, but has not disclosed what it receives, or its contractors.

Contacted by The Shift, MHRA president and tourism businessman Tony Zahra confirmed the arrangement but declined to provide financial details.

He dismissed suggestions that government financing compromised the lobby’s independence. Pressed on how much money the MHRA was making from the deal, Zahra requested written questions.

Replying by email, CEO Andrew Agius Muscat confirmed that the MHRA signed its agreement with the Malta Tourism Authority in April 2026, just a few weeks before the elections. At the time, Ian Borg was responsible for the MTA.

“The arrangement is structured around measurable improvements in collection revenues against historical levels,” he said.

He did not disclose the financial mechanism, despite explicit questions about fixed fees, percentages of collections, transaction charges and reimbursements.

Questions were also sent to Finance Minister Caruana and the MTA. Neither replied by publication time.

The tourism association’s response confirms that an organisation representing accommodation businesses is now acting on the government’s behalf in administering a tax those businesses must collect and remit.

“MHRA’s role is limited to supporting the reporting, reconciliation, collection, and related operational processes,” Agius Muscat insisted.

Tourism sources, aware of this agreement, said the dual role creates a gross conflict between defending members’ interests and administering their obligations impartially. The MHRA also represents members on the MTA board, raising questions about approval and supervision of the agreement.

The Shift is informed that members of the MTA’s board do not know the arrangement’s details.

Asked about conflicts, Agius Muscat defended public-private cooperation without supplying the agreement’s specific safeguards.

“Such public-private administrative arrangements are also well established across the European Union,” he said, without giving any examples.

He did not explain the arrangements separating lobbying from tax administration, restricting access to taxpayer information or independently scrutinising remuneration.

“There is absolutely no distinction between members and non-members,” he insisted.

Agius Muscat said all contributions were paid directly into MTA’s bank account, rather than an MHRA account.

The most significant disclosure concerned the higher tariffs introduced during the last budget.

The MHRA said it had “already requested a review of its agreement with the MTA” to ensure budget changes did not produce “any unintended benefit to the MHRA”.

Agius Muscat said the MHRA had “invested its own resources in developing a dedicated online platform”.

Claiming transparency, he said stakeholders had been informed, and collections were subject to the MTA’s financial controls and applicable audits. Yet the MHRA did not supply the requested agreement, financial schedules, or ministerial direction when The Shift asked for the documents.

Under the latest budget announcements by Caruana, from January 2027 the nightly adult charge rises from €1.50 to €8 for hotels, capped at €64, and €10 for short lets, capped at €80. The current cap is €22.50. It is unclear whether the distinction between hotels and apartments was an MHRA suggestion.

Publicly, the MHRA opposed the increases, warning about tourism competitiveness. Zahra also criticised their introduction during the winter season and said the association had expected a smaller rise following government discussions. He did not comment on his association’s role or the direct benefits to his association as the scheme’s administrator.