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Julian Manduca
The highly controversial eco-taxes - or contributions - are to be implemented Wednesday 1 September and while several within the business community know what to expect, many retailers and members of the public that spoke to this newspaper, remain confused.
The GRTU, representing small businesses, reached agreement on the taxes this week but still believes the government is rushing needlessly. The Federation of Industry said it was taken by surprise, and the man in the street is left in a state of confusion.
While the taxes become legally binding on Wednesday and the law is available for everyone to see the details of the new agreement will be revealed in a special edition of the government gazette which will be published tomorrow Monday.
The details and workings of the eco-contributions might be clear in the minds of some, but pertinent questions remain unanswered especially in the realm of price control. The new agreement means that the eco-contribution will not be charged on existing stock, but a consumer entering a bar is not to know whether the drink she or he is about to guzzle is from new stock or old. Retailers could have a field day.
When MaltaToday spoke to the GRTU’s director general, Vince Farrugia, he did not exclude that some people might abuse, but said “given the tight market situation I do not expect businesses to do so. Companies are looking to charge lower, not higher prices.”
Farrugia also told this newspaper that Prime Minister Law-rence Gonzi and Parliamentary Secretary for finance, Tonio Fenech have promised that, should there be an increase in the cost of living because of the taxes, it should be set-off in the next budget.
The law will rely on the businesses to make the correct declarations, but consumers will not know in the coming months whether they have been taken for a ride. Significantly consumer associations seem to have been left out of the negotiations, as if the business community is the only one to be affected by the incoming tax.
From the point of view of preparation for the new tax, producers, importers, wholesalers and retailers who were not participants in the negotiations with the government and have not received the GRTU’s instructions now have ‘two’ days to understand what they are meant to do and how to implement the tax.
If those in business are not altogether certain what they should be doing come 1 September, still less the general public and the rest of civil society that has been excluded from the discussions.
The Prime Minister announced 25 August that the to-date much maligned so-called eco contributions will be effective 1 September, but many are still insisting that what is being introduced is simply an additional tax and will not achieve the aims of what is normally known as an eco-tax.
MaltaToday asked various ministries whether they felt the publishing of the regulations was too close to the implementation, but neither the finance ministry or the VAT department felt they could comment, except to say that a press statement would be made.
The DOI attempted an answer Friday telling MaltaToday: “Government will continue to ensure that the relevant information reaches the media in due time. The provisions have all been discussed and endorsed by the constituted bodies during the consultation phases during the last month.”
Among the ministers George Pullicino, the minister for the environment had the gumption to answer and when asked whether enough time was being allowed for people to familiarise themselves with the taxes, said: “it’s subjective.” Asked to explain Pullicino said “the original bill was published some months ago, people are aware of the agreements with the constituted bodies and of the changes that were made to the bill since it’s details were first published.” Pushed as to whether he felt individual business persons were being given enough time to prepare for the introduction, the minister repeated, “it’s subjective.”
The government had said the taxes would be introduced “in September” earlier on, but at that time opposition to the taxes was at its high point. On 25 August the GRTU removed its opposition to the tax and on that same day the Prime Minister announced 1 September as the effective starting date.
But even the GRTU seems to have been shocked by the swiftness of the government’s intentions and said Friday that it: “still believes that government is rushing unnecessarily to introduce the tax as from 1 September 2004.” For some unknown reason, the GRTU statement which explained at least to its members what to expect was ignored by the media (see box).
What is for certain is that people should not expect price increases September 1 and that was made clear by the DOI in its reply to MaltaToday: “The Eco-Contribution will be not be due on existing stocks already on the Market as from 1 September. This means that consumers should not experience an immediate increase in commodity prices. This in itself would assist the familiarisation process of the new regulations.”
Efforts made by this newspaper to obtain a copy of the legal notice that will introduce the tax proved fruitless as the Department of Information told the paper that “A Legal Notice in the supplement to the Government Gazette will be published in a special edition on Monday coming.”
MaltaToday spoke to the Commissioner of VAT Oliver Vassallo, but was referred to the ministry of finance. Spokespersons from the ministry of finance also said they could not comment and told MaltaToday that “a press release will be issued shortly.” The finance spokesperson said he was not in a position to answer questions about the eco-taxes and insisted MaltaToday waits for the official press release. MaltaToday was interested to be able to inform its readers about what could be expected on Wednesday and wanted to ask questions such as: Will the new regulations be exactly as first announced? Will the changes announced by environment minister George Pullicino be reflected in the Legal Notice? Will prices go up from 1 September? Will the charge be the same whatever the size of the container even if they are small ‘travel’ packets (in the case of toiletries)? Or miniatures in the case of spirits?
The Federation of Industry, that represents many of those that will have to implement the tax, was “surprised to learn from the statement issued to the media by the GRTU that it was now satisfied about the mechanics of the Eco-Contribution law and that it has now withdrawn all its objections to its immediate implementation,” in a clear indication that there is scant cooperation between the constituted bodies on the issue.
On his part GRTU director general, Vince Farrugia told MaltaToday he was upset by the FoI’s statement because Prime Minister Lawrence Gonzi had clearly stated after a meeting at the Inquisitor’s Palace that the FoI and other constituted bodies except for GRTU were in agreement on the eco-taxes.
Last Friday, Farrugia told MaltaToday, the Parliamentary Secretary for finance, Tonio Fenech had said that that Prime Minister was not willing to budge on the date in the presence of FoI officials and it was clear that the FoI were in agreement with the Eco-tax law as proposed.
On Friday the FoI said it is “insisting that a balance be found for the proposed Eco-Contribution, through compensatory measures to both manufacturing and service industry,” but the government has not since responded.
When MaltaToday asked FoI Director General Edwin Calleja whether felt his members are properly informed of what they can expect 1 September and whether he felt that enough time is being allowed to them to prepare, his reply was: “All FoI members to be affected by the new scheme for Eco Contributions have been kept informed and have participated in meetings with the Government.
“Several technical difficulties that were in the draft legislation have hopefully been cleared and I am aware that the Legal Notice is being published in time before the law takes effect.
“Importers and Maltese producers will be taxed on existing stocks at the next payment date of VAT. New imports of the products listed in the law will be taxed at customs entry stage. Products manufactured locally after l September, 2004 will similarly be technically liable for Eco Contribution on production. Payment will fall due on the first payment date for VAT following the date of manufacture.”
On 27 July environment minister George Pullicino had said that amendments had been made to the Eco-Contribution Bill. Pullicino was reported as saying that “the rate for small fridges and freezers was being reduced to Lm10 from Lm12 while it would be raised to Lm30 for large refrigerating and freezing equipment.”
Minister Pullicino had explained that the tax on primary cells and primary batteries is to be levied at 2c5 per battery whereas the rate on empty carbuoys, bottles, flasks, jars and other containers made of plastic, glass or metal for the conveyance or packaging of beverages was reduced from 2c to 1c.
Environment NGOs were caught unawares by the Prime Minister’s statement last week when he announced the date of the introduction of the eco-tax. The environment NGOs met minister George Pullicino soon after the government decided to postpone the introduction of the tax and were lambasted for not supporting a tax, which the government feels is environmentally beneficial. The environment groups explained that they were completely left out of any consultation and that the tax as proposed did not reflect what they believed an eco-tax should. The environment NGOs said the aim of eco-taxes should be to encourage people to buy environment friendly goods, something which the law did not.
During the meeting Pullicino, admitted that the NGOs should have been consulted, and told them that a Commission would be set up on the eco-taxes and that the NGOs would be represented. The environment groups believed that the proposed Commission would start its work before the eco-tax regulations came into effect so they could make suggestions and recommendations.
Rudolf Ragonesi spokesperson for Friends of the Earth Malta, told Friends of the Earth: “At all important stages of the passing of this law, Malta’s environment groups were left out of the discussion, we are not even sure of the full details of the tax that will come into effect 1 September now. We continue to insist that the tax should discriminate between those products that harm the environment and others that harm it less.”
When MaltaToday contacted George Pullicino the environment minister said that the Commission to oversee the workings of the eco-contribution will be appointed and should meet within the coming week. |
