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Budget measure promoting physical activity falls short

The measure, which brought in a substantial reduction of VAT from 18% to 7% for “all sporting facilities, including gym memberships, fitness centres, football nurseries as well as other activities,” had the aim of encouraging people to engage in a healthy and active lifestyle

Martina Borg
21 January 2016, 8:25am
A budgetary measure introduced ostensibly to encourage people to lead active lifestyles, has somewhat missed its mark as a number of sports facilities which benefitted from the measure have not cut prices, and in some cases, even raised them.

The measure, which brought in a substantial reduction of VAT from 18% to 7% for “all sporting facilities, including gym memberships, fitness centres, football nurseries as well as other activities,” had the aim of encouraging people to engage in a healthy and active lifestyle, but the decision taken by some facility operators means that the measure may have been neutralised despite all its best intentions.

Prime minister Joseph Muscat has made reference to the situation in a series of addresses to the media, stressing that many were unaware of the potential injustice, after the finance ministry issued guidelines to operators to inform them of the new VAT rates on 4 January.

In response to questions by this newspaper to some of the leading sports facilities on the island, a couple, namely Sky Spirit Fitness Lounge and Cynergi said that new membership fees had been reduced accordingly at the beginning of the year. 

“We welcome the government’s initiative and are very happy to play an active role in promoting healthy lifestyles in Malta,” Cynergi general manager Jim Harvey said. 

However, a number of other operators have taken something of a different approach, with some using the additional revenue for refurbishment and others still opting to offer their clients additional perks. Some operators even claimed they had not been informed how the initiative would play out. 

Le Meridien’s Lotus fitness centre, a boutique style gym, told MaltaToday that membership fees went up year on year, to allow operators to carry out the necessary refurbishment on a yearly basis regardless of anything else.

“This year, we kept prices the same as last year’s, and we used that extra bit of cash to carry out much needed refurbishment,” general manager Alex Incorvaja told the newsroom, adding that the work would still ultimately benefit clients, as it would help them make better use of the facility.

“Had it not been for the measure, our prices would have gone up, but the VAT reduction means that we can keep the same prices,” he explained. 

However, the Lotus fitness centre was not the only facility to keep the same prices, with other operators doing the same, but allowing members to use multiple branches across the island and unlimited classes. 

Similarly, after some consultation with their accountants Fitness Planet decided to offer clients the same prices as last year, giving clients an additional time period of gym-use for free.

“It would ultimately work out as 33 days for free in addition to a one-year membership, according to the 11% reduction,” the owner explained. 

Although it is perhaps important for consumers to know what they are due, it should be noted that lodging a complaint about the matter, or expecting stricter regulations to the way private businesses operate, is no simple matter.

The Malta Competition and Consumer Affairs Authority explained that although it couldn’t do anything about VAT enforcement, it was currently looking into the issue to establish whether there was a breach of the Competition Act. 

Martina Borg focuses on lifestyle and society issues
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