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Abraham Lincoln stated that nothing is certain in life except for death and taxation. In fact in recent days both the Prime Minister and his Parliamentary Secretary were unwilling to give any guarantees that there will not be any further tax increases.
We believe that in today’s economic climate it is unwise for Minister George Pullicino to argue for the further imposition of taxes. We are experiencing an ailing economy, a sense of uncertainty with fewer tourist arrivals, a fall in the manufacturing economy and fewer reported sales at the trade fair.
The economy is sluggish and ailing. There is less money in circulation and an extremely high debt level. To impose higher taxation in this economic climate is madness. There is a lack of disposable income which is impinging the public’s purchasing power. Consumer spending is down and as a consequence the economy carries on suffering. There is no ‘good’ feeling. Indeed this feeling seems to have dissipated since 1995 when VAT was introduced extremely harshly. With hindsight there should have been a much softer VAT landing at a lower rate possibly 5 percent which would have allowed both the businessman and the consumer time to adjust and to get used to the shift from direct to indirect taxation. Having said this if VAT were not introduced, today’s debt would have been much higher.
Suddenly, in this economic background, Mr Pullicino decides to introduce a tax camouflaged as an eco contribution in order to sweeten the pill. So much for the pre-electoral campaign against eco-taxes by Pieta.
This newspaper favours the introduction of an eco-tax on the clear understanding however that the measure is not intended to be introduced simply for revenue generation, but to encourage environmental awareness among the consumer based on the principle that the polluter pays.
According to the budget, a number of products had to be selected for their impact on the environment. The idea of such a tax is to direct the consumer to buy environmentally friendly products by putting a charge on the non –friendly products.
It appears, however, that Government is toying with the idea of introducing a blanket provision whereby all products are subjected to such a tax. This is folly as it goes against the very raison d’etre of such a tax. If Mr Pullicino is looking at such a tax simply as a way to finance his waste management strategy then the measure is misplaced. The government should turn to the EU and start complaining ‘aggressively’ about the need to be funded on this one too.
Mr Pullicino must realise that the country can ill afford more taxation. If it is intending to introduce further taxation, it will do so at its peril. The middle class is already feeling extremely sandwiched, its patience is fast running out. An ailing economy with a massive debt and a lowering of living standards has all the ingredients for popular protest.
This newspaper stands four square behind the plight of the middle class which is feeling and experiencing a lower standard of living.
The indiscriminate introduction of a tax on all products risks being detrimental to the business community and to the economy in general. The economy is at the crossroads and Government must decide to take a stand in favour of business. It is with much regret that we notice a growing distancing of this Government from the business community.
The cry from the middle class is loud and clear, no more taxation. Further taxation will sound the death knell to the economy. Why is a perception growing daily that decisions are being taken in a hasty and half thought out manner?
Why does this government act in a crisis management mode, fire fighting desperately and being unable to communicate the big European picture well?
We always knew that Europe was not going to be a free ride or a joy ride but we were always led to believe that Europe would lead to a better quality of life.
We remain certain that it will in the long run, but in the short term Government must play its part even more rigorously to ensure that it cuts its revenue wisely and fairly. How can government justify lavish spending in certain areas - the recent purchase of a property in Brussells is a case in point, and simultaneously expect the ordinary citizen to bear the brunt?
Mr Pullicino must listen and moderate his taxation plans. This tax must be limited to non-environmentally friendly products. It is in this spirit that we would understand if the taxation were increased. The fiscal measures should be used to encourage the purchase of environmentally friendly goods or containers that will be recycled. But the proposals as so far presented appear to target a far wider product range and are not limited to packaging.
It appears just as a fiscal measure to increase Government revenue. This is unacceptable. All products will simply increase in price and this will generate less spending with all the negative results this brings for any economy. It simply does not make good commercial sense and certainly not in the prevailing economic climate.
Our message is simple, no more across the board taxation, Mr Pullicino.
Government has announced that it will be setting up a commission to evaluate the affects of this tax on the economy. The likely affects are already there for all to see: the tax will increase prices and will make people spend less. The result of the so-called eco-taxes will be diametrically opposed to what the economy needs at this very moment in time: more spending and growth in order to kick-start the economy.
The Prime Minister would be best advised to set up an economic think tank made up of competent and professional persons qualified in economic matters. They should guide him and show him a way out of a difficult economic situation which becomes more dangerous daily.
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