More than enough time has now passed after the events described in this book and we may now analyse the facts described with more detachment and objectivity.
Concurrent with Malta's accession to the EU an eco-policy of sorts was introduced by the PN administration. Today, very little of that remains as significant parts have been removed both by the PN government and by this one as well.
Originally submitted as a dissertation to Staffordshire University for a Sustainability and Environmental Management decree, this book tracks the introduction of eco-tax by the government around 2004.
Today we know Carmel Cacopardo as the deputy chairman of Alternattiva Demokratika but many may not remember his chequered past. An architect by profession, he contested no less than three general elections in the interests of the Nationalist Party. He was later an Audit Officer at Mepa before moving out in protest.
Malta's small size makes it an interesting case study not just on taxation but also on the political substratum of the island country. But then politics and ecological considerations are intertwined to a degree that one may not initially imagine.
Before EU accession, Malta did have some green taxation: unleaded petrol was charged at a different price, as was biodiesel, there was a special motor vehicle licence to enter Valletta, water prices had specific in-built differentials, there were different development permit fees, and even then incentives for the use of solar panels and heaters, etc.
When Malta began its accession negotiations with the EU, Malta initially proposed the retention of the existing regime, including a command and control regime with regards to beverage packaging. This shows how right at the beginning the glass bottles vs plastic bottles issue took the foreground of the issue when it should not have been like that at all.
Anyway, as I had reported back on 14 August 2002 on this same paper, 10 out of the then 15 member states had accepted that Malta needed to retain its command and control regime because of its small size but as John Dalli, then Finance Minister, explained, Malta did not succeed in retaining its command and control regime because this was deemed to be a protectionist and not an environmental measure.
A revised negotiating position was thus submitted and a compromise reached involving a transition period until 31 December 2007.
Once the issue was settled, the debate began on what needed to be done. Francis Zammit Dimech, then Minister for Resources, spoke in favour of a waste management scheme and a bring-in scheme where deposits on plastic bottles would be refunded upon return.
But the bottlers on the island had other ideas. All wanted to retain the command and control regime mainly because it protected them from competition but they were aware this would not be accepted by the EU. General Soft Drinks toyed with the idea of an eco tax but Farsons wanted to introduce a system of returns on the Danish model. But the European Court of Justice had already found against Denmark in a case instituted by the European Commission.
It was the private sector that came up with the idea of an eco tax, at least according to Lawrence Zammit. But all other sectors were against. The political parties were divided: while the Greens were all for an eco tax, the Labour Opposition was dead set against it. After all, Labour was still opposing EU membership which, as Evarist Bartolo wrote, "compels member states to obey stupid rules".
Another 12 months were to elapse: eco taxation was announced in the first budget after the 2003 general election. It was announced in the Budget Speech by John Dalli, Minister of Finance. But no less than seven months were to elapse before the matter was presented to Parliament.
In the meantime, there had been many consultations with the bottlers of soft drinks and as Prime Minister Gonzi admitted, they had not reached a satisfactory solution.
Meanwhile too, a Cabinet reshuffle had taken place in April 2004. This was a Cabinet with an emphasis on the environment. George Pullicino became Minister for the Environment and the responsibility for waste management was added to his ministry from Ninu Zammit's one (maybe after the controversial selection of a site near the Mnajdra Temple as a temporary landfill).
Faced with these and other controversies, government commissioned KPMG to submit proposals on the implementation of eco taxation. KPMG submitted its proposals as from May 2004.
What happened later caused the whole eco tax mess. As Tonio Fenech told the author (you can find this in the footnotes) the first three months of the year were spent in the leadership contest. Then came the reshuffle and by mid-year, as the deadline for its introduction neared, total panic ensued.
Vince Farrugia for GRTU claimed government had consulted the constituted bodies only at the last minute. So did FOI (Godwin Micallef) and MEA (Arthur Muscat) while Martin Scicluna wrote that government had turned "positives into negatives with its cack-handed approach". The trade unions complained they had been left out of the consultations.
In Parliament, the author writes, "having first created this mess, Minister Pullicino tried to mend fences". Notwithstanding the fact the Bill was being debated in Parliament, a commission was to be appointed to examine the legislation and recommend to government.
No White Paper was ever published. The public got the perception this was primarily a tax, a fiscal measure to reduce the fiscal deficit.
The Bill was introduced in Parliament by Minister Pullicino on 5 July 2004 and debated through 12 consecutive sittings until final approval on 27 July; 35 MPs took part in the Second Reading and seven at Committee Stage.
Austin Gatt, Minister for Industry, did not take part in the discussion when FOI was against eco-tax in principle. Nor did Tonio Borg who had been Minister for the Environment during the accession negotiations and who could have cleared up whether he was against eco-tax in principle or not. He took part at Committee stage with some brief legal comments.
The government members praised the Bill as showing the government's commitment to the environment while the Opposition claimed this was another form of taxation to make up for the deficit. (Leo Brincat, Charles Mangion, Carmelo Abela, Marie-Louise Coleiro, Chris Agius, Joe Mizzi, Joe Sammut, Stefan Buontempo and Gavin Gulia).
The capital expenditure was estimated at €32 million. Minister Pullicino informed the House that Malta was one of a few countries where domestic waste was collected on a daily basis free of charge but he did not inform the House that concurrently government, through WasteServ, was planning to introduce a form of payment by households.
Minister Pullicino also told the House that the eco-contribution was to be collected by whoever placed a product on the market, both importers and manufacturers. But the open borders regime that came into effect as a result of EU accession meant that goods coming in from Sicily were not subject to Customs and thus no eco contribution would be collected. This point was very strongly made by Parliamentary Secretary Edwin Vassallo in an interview he gave the author.
In his speech, Minister Pullicino contrasted the Lm48 flat rate the short-lived Labour government proposed to levy to finance sewage infrastructural works and stressed that the financing of waste management was not the primary aim of the Bill.
Joe Brincat, Shadow Minister for the Environment, pointed out that the tax paid would exonerate the polluter who would feel that through the eco contribution he would have acquired the right to pollute.
Jeffrey Pullicino Orlando, then a government backbencher, tried to dampen criticism of the Bill by saying only fine-tuning was required. He shared Minister Pullicino's assertion that the eco contribution would encourage the use of glass bottles but he may not have been aware that almost simultaneously with the debate the government was preparing documentation informing the EU that the obligations resulting from the Free Trading Regulations may induce a shift from the reusable glass containers to one-way PET packaging.
The government's original intention was to tax plastic bottles at 3 cents per bottle. During discussions with the bottlers this was reduced to 2 cents but subsequently the bottlers drove a better deal and the parties settled for 1 cent per bottle.
Government veered between a gradualist approach, on the insistence of FOI which said industry faced a plurality of issues all of a sudden, and GRTU which put pressure on the government to reject the gradualist approach because periodic changes in the list of eco-taxable products created market distortions among its members.
Goods such as toiletries, white goods, tableware, chewing gum, ammunition cartridges, mattresses, plastic bags and telephones ended up subject to eco-contribution without having been on the original list. There was nothing gradualist in this list: it was just an expanded list.
Speaking in Parliament, Edwin Vassallo said he was unsure whether an impact assessment of the proposed measures had been carried out. The cry was later taken up by Labour MPs. Minister Pullicino replied seven months later but he said he would lay the impact assessment study only on condition the Labour side lay down the impact assessment carried out by the Sant administration in 1997 regarding water and electricity and drainage charges.
The author persisted and asked Mepa if any such study existed but they told him no one was aware of any such study. This was later confirmed in an email by Chris Ciantar, a director in the ministry.
So no economic or social impact studies were carried out by the government prior to the introduction of the eco-contribution. Instead of impact studies, the government made do with some calculations carried out by KPMG. This gave the government three options, of which two related to the actual costs borne by WasteServe and the third was based on a notional income of Lm4 million. Government chose the one which gave the largest return to the exchequer.
And so it went on. On the eve of coming into force, Schedule One to the Act was amended. Two new categories of ovens were introduced - less than 48 hours before the law entered into force. Following the Budget for 2005 extensive amendments and additions to the list were introduced. A controversy developed over three of the new items - ammunition cartridges, plastic bags and electronic equipment. Faced with opposition, government quickly changed its position.
The rest, as they say, is history. The eco-contribution with such a shaky gestation did not live long. It was a promising attempt to change the pattern of Maltese consumers to a more ecological basis floundered and sank. When we today look around us and see the many blights on the Maltese economy and landscape, at least part of this blame must lie at such a botched and hurried attempt at legislating.
Carmel Cacopardo
Time for Radical Change
The Introduction of Eco Taxation in Malta
Midsea Books
2006
194pp