In a round table meeting organised by the European Commission
Representation Office in Malta GRTU CEO raised a number of important issues
which the Commission cannot ignore when it is highlighting certain deficiencies
that are hindering Malta's competitiveness.
One of the issues highlighted by the Representatives
of the Commission was tax compliance and curtailing evasion. GRTU CEO argued
that in saying this the Commission cannot disregard the situation of rampant
tax evasion that is occurring in Malta. Ms Psaila Mamo argued that a
significant amount of goods are coming into Malta through various channels and
totally avoiding the dues such as VAT, Excise Duties and Eco Contribution. The
representative of the Commission said that it is aware of the plight of the
GRTU but the Commission at this stage cannot intervene directly.
He stated that the Member State is obliged to ensure
that VAT is paid and take necessary actions to address problems but the method
of implementation is up to the Member State.
The Commission also outlined that it is not in its interest to make it
difficult for the Member States to introduce measures to tackle abuse if the
measures are genuinely targeted at this scope and not at creating obstacles to
the single market. He further stated that the Commission is always open to help
Member States and provide guidance.
Another issue included in the CSRs for Malta was
Access to Finance and the Commission mentioned specifically that ‘the lack of
alternative debt financing leads to a high cost of funding for companies'. The
banks were very defensive on the issue saying that the their model was
different from that of the other Member States and it has worked for a very
long time and they see no reason to change it. They explained that there is a
risk involved and the banks calculate this risk, which is reflected in the
interest rates.
GRTU's CEO said that irrespective of the model used
and the way risk is calculated, the bottom line is that access to finance in
Malta is very expensive and this impinges heavily of the competitiveness of our
businesses compared to their counterparts in Europe. Malta is not the only
Member State that survived the crises well but the banks in most of the other
countries still manage to give finance at lower rates. Ms Psaila Mamo argued
that the banks should not exclude the possibility of changing their model but
because they are doing so well they do not feel the need to. She continued
saying that it would be beneficial to know how the banks calculate their risk
and that they would explain this to their clients so that the system is
transparent and the client would be able to understand how they can reduce
their risk potential and benefit from cheaper rates. The JEREMIE scheme was
also mentioned and that there must be a reason why it did so well. This in
itself is evident that lower interest rates and collateral requirements and in
high demand.
