Cham­ber of Com­merce ac­cuses gov­ern­ment of im­pos­ing ‘ir­re­spon­si­ble tax on daily life’

Malta Independent - - NEWS -

The Cham­ber of Com­merce, En­ter­prise and In­dus­try said to­day it must air its con­cerns on the gov­ern­ment’s per­sis­tence – in the last Bud­get – to re­place EcoCon­tri­bu­tion with Ex­cise Du­ties on cer­tain prod­ucts. In a state­ment, the Cham­ber has taken this stand af­ter hav­ing care­fully con­sid­ered the feed­back re­ceived from mem­bers while eval­u­at­ing cer­tain mea­sures in more de­tail. The Cham­ber op­poses this trend be­cause com­pa­nies were ex­empt from Eco-Con­tri­bu­tion if they par­tic­i­pated in a waste man­age­ment scheme. With this mea­sure, com­pa­nies must pay the Ex­cise Duty as well as the fee for the waste man­age­ment scheme.

This harm­ful trend took off in pre­vi­ous years with, among oth­ers, min­eral wa­ter, non-al­co­holic drinks and plas­tic bags and the Ex­cise Du­ties on these prod­ucts was fur­ther in­creased in the 2017 Bud­get. Mean­while, the list of prod­ucts was ex­tended fur­ther this year to in­clude per­fumes, make-up, sham­poo, soap, shower gels and per­sonal hy­giene prod­ucts. This de­vel­op­ment is ob­jec­tion­able on a num­ber of fronts.

From a so­cio-eco­nomic per­spec­tive this is tan­ta­mount to a tax on ev­ery­day life on all con­sumers, ir­re­spec­tive of their in­come lev­els, who need to use these es­sen­tial prod­ucts daily. Be­sides, the mea­sure is re­gres­sive be­cause it is im­posed as a flat rate on weight or mea­sure­ment of the prod­uct so it hits low-in­come classes harder than their more af­flu­ent coun­ter­parts. Ex­cise du­ties, by their very na­ture, tend to be more in­fla­tion­ary be­cause these are payable upon im­por­ta­tion so there­fore the tax has a high im­pact at re­tail price level. More­over, ex­cise du­ties can­not be re­cov­ered on prod­ucts which are not sold. Eco-Con­tri­bu­tion, on the other hand, had a neu­tral ef­fect on con­sumer prices be­cause, as men­tioned above, com­pa­nies that par­tic­i­pated in a waste man­age­ment scheme were ex­empted from the tax.

In terms of the en­vi­ron­ment, this mea­sure pe­nal­izes re­spon­si­ble com­pa­nies be­cause they are no longer re­warded for tak­ing ac­tive mea­sures to re­cover and re­cy­cle the pack­ag­ing waste they place on the mar­ket. The mea­sure is there­fore equally tax­ing on the waste man­age­ment schemes and on the en­vi­ron­ment it­self. Be­sides, Ex­cise Du­ties are re­garded as a retro mea­sure which gives added pow­ers to the au­thor­i­ties. Past ex­pe­ri­ence jus­ti­fies the Cham­ber’s con­cerns that these added pow­ers could be used se­lec­tively on re­spon­si­ble com­pa­nies thereby in­flict­ing un­due ad­min­is­tra­tive bur­dens while al­low­ing those who abuse to go about their “busi­ness” un­pun­ished.

Due to such in­ef­fec­tive en­force­ment in the coun­try, the mea­sure will ren­der abuse in free move­ment of goods all the more at­trac­tive. This will con­tinue to in­ten­sify the hard­ship on re­spon­si­ble busi­nesses, pe­nal­iz­ing them fur­ther for their com­mit­ment to­wards hon­our­ing their fis­cal and en­vi­ron­men­tal obli­ga­tions to­wards the cus­tomer and the coun­try in gen­eral. These lat­est bud­get mea­sures have not eased the cost of sales for such com­pa­nies who con­tinue to in­cur rel­a­tively high lev­els of fuel and en­ergy costs, wage in­fla­tion, lev­els park­ing fines and un­rea­son­able loss of pro­duc­tive time due to traf­fic.

There is no doubt that the fo­cus of the 2017 bud­get speech con­cen­trated on pro­vid­ing in­come sup­port for low­in­come earn­ers and pen­sion­ers. The Cham­ber al­ready ex­pressed its sup­port to this ob­jec­tive. How­ever, it is clear that the in­fla­tion­ary ef­fect which this mea­sure is bound to cre­ate, will coun­ter­act the prime in­ten­tion of the bud­get speech in a way in which low­in­come peo­ple will in­cur the harsh­est ef­fect. This is due to the higher pro­por­tions of their in­comes which is spent on those daily life prod­ucts be­ing taxed in this bud­get.

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