GRTU on the warpath over unilateral hike in excise on consumer goods

Small business chamber: excise raises prices, ignores environmental responsibilities of producers, encourages black market

The GRTU said it will not take teh hike in excise sitting down
The GRTU said it will not take teh hike in excise sitting down

The small business chamber (GRTU) has accused the Maltese government of ignoring its warning last year over the sudden introduction of excise duty on beers, wines and water when it removed the eco-contribution on packaging, to substitute for a new tax.

The GRTU said it will immediately call a meeting with the Minister for Finance to enter into discussions on the removal of the newly-announced list of goods from a higher excise fee, and will be issuing a directive to its members should government not be open to discussion and retraction.

The government has substituted eco-contribution with raised excise tax on a number of products that include toiletries, make-up, skincare and hair products, shampoos, deodorants, personal cleaning products, aftershave, room-deodorisers, soaps and shower gels, as well as building related products such pre-fabricated concrete, tile ceramics, and glass sheets.

The GRTU said it had not been consulted on the unilateral decision. “The Small Business Act emphasizes on the necessity of national governments to consult, carry out an impact assessment when a financial burden is introduced and mitigate the measures as far as possible, has been ignored. Social partners and social dialogue have also been ignored.”

The GRTU also said the price hike on daily necessities for consumers will inevitably result in an increase in consumer prices that will hit lower-income earners hardest. “This is a direct incentive for consumers to acquire goods from abroad and attempt to bypass the system of excise. The current debate on the affordability of property prices will become more precarious with the increase in prices of tiles, glass, concrete and metal.”

The chamber added that enterprises that choose not to pay the cost of excise up-front due to cash flow problems, will have to keep the goods subject to excise ‘segregated’. This means that they can use either the customs tax warehouse, with access granted only through a customs official; or apply for a tax warehouse and the area dedicated to goods subject to excise be adapted according to the necessities deemed fit by the customs department. “This includes anything from physical separation from other goods, CCTV surveillance and having goods locked with access through customs officials.”

The GRTU said that enterprises that had enrolled in a waste-compliance scheme – indeed the Chamber runs its own company, GreenMT – and who had become exempt from paying eco-tax, were once again being lumped with the cost of excise.

“GRTU has been campaigning against the unjust eco-contribution for years and we have welcomed its removal only to have the burden reintegrated with excise tax. It is obvious that the government has grown so much accustomed to receiving eco-tax from businesses year on year and injecting it directly in its coffers, without any kind of regard for the environment, that now it is finding difficulty to do without it.

“So businesses will be made to comply with the EU Directives and finally their money will really go towards recycling and treatment of products they put on the market but at the same time they have to sustain government’s dependence on the old environmentally-disguised tax.”

Official figures show that in 2015 actual government revenue from eco-contribution stood at €8.11 million, dropping to €500,000 in 2017. At the same time however it is estimated that government revenue in 2017 from excise on plastic bags, toiletries, non-alcoholic beverages and bottled water is estimated at €4 million and another €2.1 million from construction components and fixtures.

Unfair competition

The GRTU said that the products now for which excise has to be paid would thrive on the black market, and that enterprises will be losing out sales on due to unfair competition.

“This is the result of government’s failure to enforce a level playing-field across the board and control all borders and with the new additions… Government cannot only target businesses with its enforcement, something already being done poorly, but also the consumer, because they must also declare any goods entering Malta that are subject to excise.”

More in Budget 2017