The Malta Independent 26 April 2024, Friday
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Memo to Labour: the era of protectionism is over

Daphne Caruana Galizia Thursday, 28 August 2014, 09:54 Last update: about 11 years ago

 

 

The prime minister and his wife (for that nice personal touch) hosted shopkeepers to a reception at Villa Francia in Hal Lija to make them feel involved and that their concerns about retail revenue going into freefall are going to be addressed.

This is a good thing - for the prime minister and the Labour Party. "He's giving us attention/he hears us" = votes from people who can't see beyond having their ego stroked, a bit like men propping up the bar who are impressed because some girl who doesn't give a damn about what they're saying is pretending to listen to them with big eyes that appear to be focussed on the face when really they're just focussed on the wallet.

People in Malta are spending millions buying stuff on the internet that they are not spending in Maltese shops. The prime minister said at Villa Francia that he will "address the concerns" retailers have about on line purchases.

How can his government do that? There are only two ways, and both of them run contrary to EU law: restricting our access to internet shopping or imposing a tax on internet purchases.

This subject came up already before the general election, with the Labour Party making shopkeeper-pleasing noises about restricting internet purchases and then saying that it had been misinterpreted when electors who don't own shops began making ugly noises of discontent.

I had raised a red flag about it at the time, but nobody gave a damn because I was the witch from Bidnija who was paid by the (bankrupt) Nationalist Party to write what I do, which is why I wrote it, rather than a fairly sensible woman of 48 with her head screwed on who has been closely observing politics and politicians (and electors) for work purposes since 1990.

Some newspaper reports about the meeting significantly included the information that some states in the USA are imposing a sales tax on online shopping, which has caused purchases from sites like Amazon to fall.

But what they failed to include the rather more salient information is that the United States of America is not in the European Union but Malta is, and that the operational retail tax regime in the US is a sales tax anyway, even in the shops, and not value added tax as it is in Europe.

When we buy things online, we are charged value added tax by the seller just as we would be if we were buying them in a shop in that EU member state, except where that state allows an exemption (on books, for example). That is as far as it can go.

Any other form of tax that is designed to force (or "encourage") citizens of one EU member state to buy goods in that state and not another runs headlong into one of the most basic tenets of EU membership: on the free movement of goods.

No doubt the government will find a way of subverting this as it has done by selling Maltese passports - mainly to Russians, as it turns out. The difference between the passports issue and this is that internet shopping is now a national pastime and electors will not take kindly to having it restricted or abusively taxed.

I support shopkeepers and their concerns, even if for entirely self-centred reasons. Nothing beats a good browse in beautiful shops that are well stocked - even if you buy nothing, it's a great way of keeping up with what is available, and the best shops are sensory experiences. Also, shops are the perfect reflection of the micro-society in which they operate. You can read a neighbourhood immediately by the kind of shops you see, more so when what you're talking about is the capital city, which reflects on the entire country.

Walking down Valletta's main drag a couple of years ago, I was stopped by a couple of visitors who asked: "Can you tell us where the good shops are, please?" "These are the good shops," I said, "though I know exactly what you mean." In any European large town or city, the shops on the main drag are the best there are, and so a walk down the main drag tells you exactly what you need to know about the living standards of that city, its economic situation, and the spending power of those who live in the region. If you are in what appears to be a provincial town and spot Hermes and Chanel on the main pedestrian drag, you know immediately that this is rather a well-to-do provincial town and what sort of people live there.

But the solution to better retail sales cannot be making it increasingly difficult for legitimate online competition to do business. It is in studying ways to bring Maltese people back into the shops, and this can only be done by selling them the things they actually want, at prices which are competitive, and in an environment that makes shopping an utter pleasure rather than a form of hell. Easier said than done, it is true - but then that applies to everything nowadays.

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