Mr Farrugia was speaking at a press conference in reaction to an eco-tax that the government is planning to introduce. Last year, then Finance Minister John Dalli had indicated that some ecological tax would be introduced during the last Budget Speech. However, there was no mention of the tax since.
Recently, the tax was placed on Parliament’s agenda for discussion and the chamber had talks with Rural Affairs and Environment Minister George Pullicino and parliamentary secretary in the Finance Ministry Tonio Fenech.
The government’s position is still tentative. However, so far, a three per cent figure was mentioned on a number of products that had been outlined during the last Budget Speech. The money would help with the increasing financial burden of environmental protection and development. The list of taxable products mentioned in last year’s Budget Speech includes batteries, tyres, non-edible oils and oil filters, as well as electronic apparatus.
Mr Farrugia complained that the small- and medium-sized enterprise sector was already burdened with taxes, citing the VAT raise from 15 to 18 per cent as an example. He said that “constituted bodies were given the impression that the additional three per cent was to cover the added health and environmental costs.”
Mr Farrugia warned against the introduction of the tax at point of entry saying that it could have a negative effect on the efficiency of the Customs Department.
If the introduction of such a tax at point of entry negatively affects the free movement of goods, the GRTU is ready to take the matter to European Commission, he said. The GRTU will also oppose any eco-tax requesting retailers to be “the tax collectors”, saying that small business cannot be made to bear the brunt of complicated systems.
As things stand, he said, the paperwork involved with VAT, PAYE, sick and parental leave, bonuses, employment contracts, recurring charges and the new data protection regulation as well as the endless bureaucratic requirements are increasingly pressing on the potential of private initiative.
Regarding the taxation of packaging of specific producers, Mr Farrugia said this system of taxation may discriminate against a particular sector. In fact, the European Commission took action against the German government after it introduced a collection scheme on a number of products, on the basis that this discriminated against a certain sector.
The GRTU proposed that the government relocate the funds from “eco-taxes” already in place such as the tax on cigarettes, oil tax or similar taxation into an ecological fund that can be used to address environmental issues before they grow out of proportion. Mr Farrugia said the fund can then be co-managed with representatives from the private sector to ensure an efficient management of the funds.
In the afternoon, a meeting was held between the Ministry for Rural Affairs and the Environment and the chamber in which the government further explained its position.
The statement said that the government never intended to burden retailers with tax collection procedures as it never intended to introduce the tax at point of entry.
It was announced that the government will be setting up a commission to assess the introduction of a system for collecting products destined to be disposed of. The government invited the GRTU to participate and said the commission had to issue its recommendations by October.