Category: Archive – 2004

 

 

An ecological tax (or
eco-tax) is a regulatory instrument that increases the cost to actors of an
activity in a way related to the cost of the extra environmental damage caused
by that activity. It is therefore meant to divert consumption patterns away from
goods that are deemed 'bad' for the environment.

However, in case of
certain items consumers cannot substitute environmentally damaging products
simply because no alternative exists. Moreover, if these goods exhibit price
insensitive demand, then it is bound to have a distributional regressive impact.
For example, newly-wed couples cannot refrain from buying certain appliances
such as refrigerators, TV and telecommunications equipment, washing machines and
cookers. These measures will have income effects on various households with
significant equity considerations.

There are various tax considerations
that should be assessed. As they are proposed in the Bill, eco-taxes will be
charged at a fixed rate and not as a proportion of the selling price. This means
that should competition bring down the selling price of an eco-taxed item, then
that product will still carry the same fixed charge above the underlying price.
As a result, the proportion of the new eco-tax over the total selling price will
be relatively higher. Consumers may prefer substituting to higher priced items
knowing that they will pay relatively lower tax as part of their total
cost.

Eco-taxes will be imposed on items which are already VAT-able.
Therefore, it is a new layer of taxation over and above the current system. Even
so, some imported items may carry an eco-tax from the originating countries, in
which case products will be taxed twice. Increasing rates of taxation on some
goods may affect negatively the cost structures of companies that compete in
international markets. Inflationary pressures will further affect the price
competitiveness of our economy.

Finally, one has to see who will shoulder
the burden of this new tax. As it is being proposed in the Bill, the liability
for the payment of the eco-contribution shall lie with the producer (the term
'producer' refers to both manufacturer and importer of the eco-taxed product).
The eco-contribution shall be payable on a quarterly basis in arrears on
submission of the return relative to the preceding quarter. It is easy to
conclude that producers shall pass this burden to consumers, yet if demand for
the product falls, producers still have to pay the amount due on their remaining
stocks. Such measures will clearly put further pressures on tightening profit
margins.

Compliance costs will be an additional burden that the producer
will have to shoulder. The registration and reporting procedures that has to be
adhered to by all producers will steal more time from productive activities.
SME's are already laden with a myriad of responsibilities, filling forms and
other procedures to comply with VAT, SSC, employment and other regulations.
Failure to comply may result in criminal proceedings!

To manage the new
eco-contribution system the government has to pump more money in another
competent authority to carry out the functions laid down in the proposed Act.
There are costs involved in creating new monitoring regimes or legal
frameworks.

Ecological taxes can provide a platform for initiating a
broader reform of the tax system and create political support for changes to
labour and capital taxation that otherwise would not be possible. Ecological
taxes are often seen as socially favourable and morally difficult to oppose and
could be used as a lever to remove economic distortion in the existing tax
system or to raise taxes on currently relatively under-taxed
groups.

General tax cuts or even changes to the tax system may not be
acceptable but in the context of ecological tax reform they may be possible.
This is what a number of EU countries have done. A serious plan to implement an
eco-tax reform is not evident locally but the government is simply interested in
finding another source of revenue, let alone popular appeals of being
environment-conscious.

It is also clear that the Maltese government did
not take heed of agreed lines of action found in the European Charter for Small
Enterprises. The Charter encourages governments to screen new regulations to
assess their impact on small enterprises. No business impact assessment has been
produced on this new taxation system that will affect importers, traders,
consumers and local manufacturers.

No discussion whatsoever has taken
place with the GRTU as a representative of those who will ultimately have to
carry most of the compliance burden. Thus, it is clear that although the Maltese
government boasts of being a strong supporter of this Charter it is putting
aside both preliminary studies as well as healthy consultation. It is promoting
instead a confrontational approach while rushing with quick decisions to make
good for past irresponsible policies. This goes completely against the spirit of
social dialogue the GRTU is used to at European level.

For such reasons,
the GRTU is pressing Government to consider again such actions and not hurry
with its decisions. The proposed Eco-Contribution Act has supply-side
implications on national competitiveness, besides equity considerations. It is
not to be construed that the GRTU is against environment-friendly policies but
rather that a serious plan should be put in place to achieve a win-win
situation.

The Bill as proposed is an affront to the businesses affected.
Businessmen are expected to pay tax on all the stock they now have and to sell
at a higher price from August onwards. The traders who have fared badly recently
as total demand slumped, will be worst hit as they have the highest level of
stocks. From then onwards they will have to take note of all they import as all
listed goods are taxable as soon as they leave customs.

No one has any
clear idea how the whole thing is going to work as nobody bothered to work out
the detail.

The GRTU has given notice to Government to inform traders by
Tuesday what procedures will be applied if it is seriously determined to impose
this tax as from next month. If Government cannot decide by Tuesday then the
GRTU is demanding that the effective date be postponed.

The GRTU is
convening effected traders on Tuesday. They will decide on how to face the
imposed challenge.

Il-GRTU li tirraprezenta lill-maggoranza assoluta ta’ dawk li f’isem il-gvern ser ikunu sfurzati jigbru u jhallsu din t-taxxa gdida m’ghandhomx l-icken hjiel ta’ kif ser tingabar ghax granet biss qabel tidhol fis-sehh il-ligi hadd mid-dipartimenti tal-gvern li suppost ser ihaddmuha ma jaf xejn. Lill-GRTU ma dahluha xejn fit-teknikalitajiet ta’ kif ser tinhadem u ghalhekk ma tistax tigwida lin-negozjanti dwar x’ghandhom jaghmlu. Il-GRTU ma ddahlet f’xejn, lanqas meta il-gvern minn jheddu ddecieda fuq liema prodotti u kemm ser tingabar taxxa fuq il-proddoti maghzula. Min fassal din l-ligi ma tghax kaz b’mod serju tal-principji tal-proporzjonalita’ tal-livell tat-taxxa b’paragun mall-spejjez ohra u r-rati ta’ profit marbuta mall-prodotti llistjati. Min fassal din it-taxxa gdida ukoll ma’ tghax kaz xejn tan-numru ta’ prodotti fuq il-lista li jkunu waslu Malta b’eco tax diga’ maqbuda fihom ghax tkun diga thallset f’xi pajjiz iehor li jaghmel parti mis-suq intern tal-Unjoni Ewropeja. Hu ghalhekk li l-GRTU qed tikkundanna din it-taxxa gdida bhala att ta’ paniku mill-Gvern hekk kif qed jara li n-nefqa pubblika harbitlu mill-kontrol u issa qed idur ghall-darb’ohra fuq il-konsumatur biex igieghlu jhallas aktar biex jaghmel tajjeb ghall-infieq bla kontrol tas-settur pubbliku. Il-GRTU nhar it-Tlieta ser tlaqqa lin-negozzjanti w imprendituri li l-prodotti taghhom huma milquta mit-taxxa l-gdida fuq il-konsum. Sa nhar it-Tlieta l-GRTU qed tistenna li minn ghaggel fassal il-ligi issa jkun lest biex jispjega kif ser tingabar b’mod ordinat u organizzat jew inkella jhabbar li ippospona d-data tal-imposizzjoni ta’ din it-taxxa imposta bl-addoc. Bla arrangament immedjat m’hemmx cans li din it-taxxa tista tiddahhal fl-1 ta’ Awwissu 2004 kif informa lill-GRTU, il-Ministru George Pullicino u s-Segretarju Parlamentari Tonio Fenech. Dan il-GRTU tghidu waqt li ssostni li t-taxxa l-gdida mhux accettabbli ghax ser tkompli izzid il-livell ta’ taxxi mposti fuq il-Maltin u zzied il-piz fuq l-imprendituri Maltin milquta. Hadd mhu kontra li ghandu jkun hemm Fond Nazzjonali li jkun indirizzat lejn problemi ambjentali. Dan m’ghandux isir b’zieda fil-livell totali tat-taxxi, izda b’riforma meqjusa ta’ taxxi, fejn jitnehhew xi taxxi u jidhlu ohrajn favur l-ambjent li izda jkollhom effett newtrali fuq il-livell ta’ taxxi.

Il-pizijiet qed ikunu assorbiti mis-sidien ghaliex f’sitwazzjoni ta’ suq hazin ftit huma dawk li s-suq taghhom jippermettilhom li jghollu l-prezzijiet biex ikopru zidiet fil-pagi, zidiet fil-prezzijet tad-diesel, tal-licenzji u mpozizzjonijiet ohra. L-effett ta’ dan hu li s-settur tal-intraprizi z-zghar li jiflah johloq impjiegi godda mhux talli mhux qed izied l-impjiegi izda qed inaqqas. Il-GRTU issostni li l-assistenzi kollha li l-gvern semma li gejjien mill-Unjoni Ewropeja mhux veru qed tasal ghand in-negozji z-zghar ghax l-flus qed imorru kollha ghand il-Gvern u l-korpi statali biex ikopru n-nefqa pubblika li dejjem qeghda tikber. Il-proposta ewlenija tal-GRTU hi li s-sidien jinghataw il-possibilita li joholqu Fond Kapitali Specjali ghall-izvilupp tan-negozju taghom. Il-flus li jitpoggew f’dan il-Fond ikunu investiti f’Bonds li l-Gvern johrog ghalihom b’rati ta’ imghax favorevoli biex jinkoraggihom. Il-flus li l-proprjetarji tan-negozji jzommu f’dawn il-Fond jkunu hielsa mill-hlas tal-income tax u kull bejgh ta’ proprjeta li d-dhul minna jidhol f’dan l-Fond jkun ezentat mill-capital gains tax u mit-taxxi fuq it-trasferiment ta’ proprjeta. Is-sid jkollu hames snin zmien li fihom ikun irid jinvesti dawn il-Fondi fi progetti godda skond kriterji miftehma. Jekk il-flus f’dan il-Fond ma jkunux investiti fi progetti li joholqu mpjiegi godda, jkattru l-livell tat-teknologija u joholqu gid ekonomiku gdid, is-sid jkun obligat li jhallas it-taxxi kollha li jkun iffranka waqt li l-Fond ikun qed ikun akkumulat. Il-Bonds li l-gvern johrog jonfoqhom fil-bini ta’ fabbriki u assistenza lill-intraprizi taht l-iskemi tal-Malta Enterprise. B’din l-iskema l-GRTU temmen li s-sid jkollu l-akbar incentiv li jhaddem flusu fil-holqien ta’ gid u xoghol gdid. Kull skema li s’issa haddem il-gvern biex ihajjar investiment gdid mill-impredituri z-zghar ftit li xejn hadmet ghax ma kienux skemi imfassla bl-incentivi gusti u saru bla ebda konsultazzjoni u minghajr ma taw kaz tal-kummenti tar-rapprezentanti tan-negozji z-zghar. Il-GRTU resqet Memorandum dwar il-proposti li qed taghmel bhala parti mill-kampanja immirata biex iggieghel lill-Gvern u s-sistema burokratika tahseb bis-serjeta fin-negozji z-zghar ta’ pajjizna. Id-diskussjoni mas-Segretarju Parlamentari fil-Ministeru tal-Finanzi saret fil-bidu tal-preparattivi ghall-Budget 2005 biex il-Gvern ikollu l-hin li jivvaluta u janalizza dak li l-GRTU qed tipproponi.

Il-GRTU ilha tishaq is-snin li l-kriminalitazzjoni tas-sistema tal-multi hi affront ikrah kontra l-imprenditur Malti. Kull ligi gdida li qed tghaddi mill-Parlament qed timponi sistema ta’ multi li jwasslu ghall-pieni ta’ habs fuq l-entrepreneurs li jiksruhom minflok pieni li jissarfu f’dejn civili. Fil-kumplament tal-Ewropa it-tendenza hi bil-maqlub u l-multi huma ta’ natura civili u mhux ta’ natura kriminali. Il-GRTU qed topponi bil-kbir ghal dan aktar u aktar meta f’Malta ghandna Gvern li jghid li hu favur l-imprenditur u jrid ihajjar lill-imprendituri Maltin jinvestu aktar u joholqu aktar impjiegi. Fir-realta kull ligi li tghaddi qed tistma’ lill-imprenditur u n-negozjant Malti bhala kriminal u l-multi mposti qed ikunu dejjem dawk li jissarfu f’habs. Il-GRTU tappella lill-membri ohra tal-Parlament biex bhall-Onorevoli Edwin Vassalo jargumentaw kontra din it-tendenza u li jaraw li l-ligijiet li jimponu multi ta’ natura kriminali fejn jidhol l-kummerc u l-industrija u s-servizzi, jinbidlu f’multi ta’ natura civili u ta’ valuri ragonevoli.

Il-GRTU qed tistudja ir-rapport tas-survey fid-dettal u ser tressaq proposti lill-gvern biex l-awtoritajiet jiehdu b’aktar serjeta’ is-sitwazzjoni mwieghra fis-settur kummercjali. Fost il-proposti tal-GRTU zgur li hemm dik li il-gvern jikkunsidra bis-serjeta id-decizjoni tieghu li jimponi Eco-tax mill-ewwel ta’ Awwissu 2004. Din it-taxxa ser tolqot hazin l-aktar lil numru ta’ setturi b’zieda fit-taxxa maz-zieda li diga qed isoffru bil-VAT u s-setturi li ser jergghu jintlaqtu hazin huma dawk tal-airconditioners, domestic appliances u prodotti tal-elettronika.

58% of those interviewed reported a decrease in sales turnover compared to last year. Of these, 52% claimed that they had a drop of over 20% in their sales. Only 14% had sales improvement while 28% estimated similar performance compared to last year. Only 22% managed to achieve the turnover they expected. 57% said that they actually did worse than expected. Meanwhile, 44% registered sales improvement during the second week over the first week. 40% recorded the same turnover as the first week with 16% claiming a decrease. Those who noted that visits to their stands increased compared to last year amounted to 26% only. 45% noted a decrease. 83% think that the dates chosen for the Trade Fair are appropriate yet 52% are also of the opinion that minor but specialised Fairs held throughout the year are affecting the overall performance of the general Trade Fair. Of particular interest, 66% think that they will participate again in next year’s Fair with 28% still unsure. Of those who will not participate again or still unsure, 50% admitted that they are not recuperating costs. However, some comment that exposition in the Trade Fair is paramount if one wants to survive competition.

 

GRTU proposes that government looks elsewhere if it
is in desperate need of additional revenue to cover the growing expenditure of
environmental protection and development. Small businesses have no
administrative capacity to handle complicated systems. Regulations hit
regressively on the small business since the owner has no expertise or enough
resources to handle separate items and procedures.

Time is also limited.
As things stand, the onus of complying with VAT, PAYE, SSC, sick and parental
leave, bonus, employment contracts, recurring charges, the new Data Protection
regulation, and endless bureaucratic requirements is increasingly pressing on
the productive potential of private initiative. This goes contrary to the spirit
inherent in the European Charter for Small Businesses to which the government is
an endorsee. It is for this prime reason that GRTU argues against the imposition
of an Eco-Tax that will have to be managed by traders and that would add
additional costs to a sector which is becoming increasingly un-competitive. GRTU
definitely objects to any eco-tax requesting retailers to be the tax
collectors.

GRTU believes that a restructuring and perhaps marginal
additions to existing fiscal measures may achieve the desired result without the
need of new taxation. It must be recalled that when VAT was raised from 15% to
18%, the constituted bodies were given the impression that the additonal 3% was
to cover additional health and environmental costs. Furthermore, GRTU believes
that a number of ‘eco-taxes’ already exist in Malta. The “eco-taxes” already in
place include, among others: road taxes; fuel taxes; planning charges; tobacco
excise; garbage charge to commercial units; and fees for dumping. Part of these
revenue sources should be pooled in an Eco-Fund that makes good for
environmental policies.

Such an Eco-Fund should be managed on the same
lines as agreed at MCESD: that of a Special Committee which also includes the
participation of the private sectors. If increased funds are subsequently
required then any amendments should be discussed according to the terms of
reference of the Committee. GRTU, in principle, is in favour of fiscal
arrangements that earmark funds to a specific public account that is in turn
used for environmental protection. GRTU also agrees with the Polluter Pays
Principle, but disagrees that specific items should be singled out for damaging
fiscal action. The end result usually is that consumers will have to pay higher
prices on particular items with a negative expenditure impact on other
purchases. It is not fair on the traders in these sectors. No eco advantage is
obtained while consumers suffer the burden.

Tax payers cannot accept
anymore that they have no control on the way government is spending tax
revenues. Each time government has a short-fall the tax payers are made to pay
more, with the burden falling primarily on the middle-income groups whose
consumption patterns are always targeted for increased taxation. Thus government
has to study carefully the impact of eco-taxes, particularly on competitiveness
and distributional effects. For example, international studies suggest that
taxes on petrol, which are considered as eco-taxes, have slightly regressive
impacts but might affect middle-income people most. An inefficient regulation
may lower the cost to some groups but at the cost of raising it more to
others

Now that at EU level all efforts are being made to cause
governments to measure the economic impact of measures prior to their
introduction, GRTU would expect government to adhere to this norm. Why set-up
Competitiveness Committees and establish competitiveness benchmarks if measures
are taken in spite of economic impact. GRTU insists on the conduct of
professional business impact assessments prior to the imposition of new fiscal
initiatives. These are needed especially if policies affect the supply side of
the economy. GRTU represents a substantial part of those who create the means by
which the economy can expand. This is why government should take heed of what
GRTU is proposing. It is the direct voice of private initiative and
enterprise.

In this respect, GRTU is against new eco-taxes that have to
be collected by the trader or retailer. If goods are taxed at the point of
entry, then this move is prone to face strong opposition especially if it
hinders the efficient functioning of the free market. GRTU has striven over the
years to ensure that e-customs procedures are introduced in Malta and today GRTU
is extremely vigilant to ensure that no restrictions are imposed on cargo
traffic. GRTU believes that should the tax be imposed at the Port this would
seriously affect the free movement of goods in which case GRTU would request the
EU Commisssion to intervene. Government would be in grave error and in conflict
with EU Rules if it were to impose the Eco Tax at the Port of entry. Chapter 10
of the Acquis indicates specifically which producers are subject to excise duty
and the customs department keeps a register of all importers handling the excise
products. Should government invent its own excise list it’ll throw the customs
department back to the times when customs officers will, for one reason or
another, impose on traders various forms of unacceptable demands that are now
happily defunct. Malta would also be in conflict with EU Rules on free
Competition if the Eco–Tax would be imposed on imports and not on exports as
stated in Budget Speech 2004.

If on the other hand the Eco Tax is
imposed on packaging of particular sectors of producers in Malta this would
further complicate the life and viability of an economic sector which is
currently striving to withstand the competition suffered following the removal
of levies and removal of protectionism.

GRTU has consulted with its
colleagues in Belgium where an Eco–Tax is imposed. Traders there all object due
to the great negative impact it has had on business and the excessive burden
caused to administer it. GRTU has also noted the EU Commission’s action against
the German Government following the hasty introduction of a deposit scheme on
certain products. The EU commission is arguing that the German scheme is
infringing competition rules.

GRTU is monitoring efforts by other EU
governments to introduce Eco–Taxes through its participation in the
Eco-Committee of EuroCommerce. As representative of business interests in trade,
wholesale and retail, EuroCommerce is objecting to the type of Eco-Tax which is
being proposed in Malta as unworkable, or infringing on free trade and may cause
unnecessary burden on traders. GRTU, through EuroCommerce, is advised to object
to the introduction of the proposed Malta Eco-Tax.

Finally, GRTU notes
that Eco-taxes exist in countries where fiscal structures have already been
overhauled. Our fiscal structure was overhauled in 1995 after the introduction
of VAT and in 2004 when levies were removed. However, other combinations of fees
and minor taxes complicate and distort the system. It was emphasised that VAT
would be the main tax and would replace the multitude of smaller taxes that have
huge compliance costs. GRTU has steadfastly recommended that the fiscal
authorities should design a taxation system that acts as an automatic stabiliser
and is therefore sensitive to business cycles and consumption forces.

GRTU objects strongly to a system of hotch potch taxation. GRTU argues
that the current economic climate in Malta shows that it is certainly not the
time to continue impinging on the already dampened business platform. Malta is
losing its competitive edge with the high aggregate tax revenues that feed
unproductive spending. GRTU strongly urges government not to impose additional
tax and bureaucratic burdens however much laudable the aim. Enterprise in Malta
cannot take on additional stress.

Fil-portijiet taghna ma jsirx bejgh la minn Maltin u lanqas minn barranin. Il-Gvern ma jistax jaghti permess lil wiehed imbghad meta jkollu talbiet ohra jghid le. Illum il-gvern Malti la jista jiddiskrimina bejn Maltin u lanqas cittadini ohra ta’ l-Unjoni Ewropea, u ma jistax jiddiskrimina bejn prodotti u prodotti ohrajn. Jekk il-gvern jiftah il-bieb u jaghti permess darba, jkompli jibqa’ jtieh kemm lill-Maltin kif ukoll lill-barranin kollha mill-Unjoni Ewropea li jridu jigu Malta jbieghu minn fuq vapur fil-portijiet taghna. Din hi pozizzjoni li l-GRTU ghamlitha cara u tghamilha b’aktar forza illum. U din mhux kwistjoni li xi hadd jghid ghax il-qliegh ser imur ghall-karita. Illum kotba ghall-fqar, ghada bejgh ta’ fridges ghall-Etijopja u pitghada ghall-missjoni. Skuza kulhadd jaf isib. In-negozjant Malti jahdem is-sena kollha, jhaddem in-nies u jhallas il-pagi, it-taxxi, l-licenzji, il-VAT u jgorr l-pizijiet kollha is-sena kollha u mhux gust li min jghogbu jidhol fil-Port bla spejjez ta’ stabbiliment, ta’ haddiema u ta’ kull piz iehor u fi ftit jiem iharbat il-hobz ta’ haddiehor. Min irid ikun galantom ikun galantom b’hobzu u mhux b’hobz il-membri taghna.

62% of those interviewed reported a decrease in sales turnover compared to last year. Of these, 53% claimed that they had a drop of over 20% in their sales. 22% had sales improvement while only 16% estimated similar performance compared to last year. 26% managed to achieve the turnover they expected. Meanwhile, only 23% registered better results than expected for the first week. In fact, those who noted that visits to their stands increased compared to last year amounted to 15% only. However, 67% of those interviewed expect better sales during the second week. Exhibitors were asked to express their opinions on what factors are influencing consumers this year. Prices and the wider choice of products attributed to competition top the list with 34% and 29% respectively. The majority of businesses (61%) introduced special schemes with their offers. Of particular interest, 56% think that EU membership has not affected the overall performance of their business so far while those who think it affected them negatively or positively are equally divided. A number of exhibitors commented on the general outcome. The majority said that the EURO 2004 football games had an effect on Trade Fair turnout. Most exhibitors believe that increased competition, economic uncertainty and less money in hand are the factors that led to the decrease in sales. The full results are also available by e-mail. A soft copy may be available from the GRTU Office, Republic Street,Valletta. The second GRTU Trade Fair Survey will be held at the end of the Trade Fair.