Preliminary results of a survey carried out by the Chamber of Small and Medium Enterprises (GRTU) has established that 72 per cent of businesses attribute their bleak outlook to the water and electricity surcharge.

GRTU director general Vince Farrugia said yesterday that 37 per cent of businesses that had registered losses of 10 to 30 per cent so far this year blamed their situation on the surcharge.

In addition, he said that 22 per cent of businesses that had registered the same loss margins blamed the increase in fuel prices, while 13 per cent believe that both factors together had caused the problems.

In addition, the survey highlighted the fact that 32 per cent of respondents believed the situation would continue to deteriorate, while 17 per cent said that fuel prices would be the major contributory factor.

Sixty-two per cent of respondents said that a reduction in the fuel surcharge would alleviate the burden, while 41 per cent said that a reduction in fuel prices would help.

Seventy-two per cent of respondents said they felt that the fuel surcharge not only affected their costs and profitability, but also the customer’s spending power.

Mr Farrugia said that something needed to be done now or the situation would spiral out of control.

“We must point out that while the government has trumpeted the 2.5 per cent increase in GDP, this will surely taper off next year. One has to understand that the government has spent a lot on Mater Dei while Maltacom and Enemalta increased their income, so that means that it was actually Big Brother that grew within the GDP,” said Mr Farrugia.

Next year, the public sector would not register such growth, he said. “And if there is a downturn in the private sector, we will see panic on Budget Day – as usual, trying to sort out problems at the 11th hour.”

Mr Farrugia said that the water and electricity surcharge and fuel prices were responsible for the stagnation of business, and the government could not continue to ignore the fact.

He said that the GRTU had put forward its proposals to the government to try and alleviate the burden. The main point, said Mr Farrugia, was that the GRTU wanted the electricity surcharge to be reduced to 40 per cent on 1 June and to be lowered again on 1 September.

He said that the GRTU also wanted to see a fiscal credit system implemented to give businesses a 100 per cent tax credit on the whole surcharge amount, backdated to the date of its introduction.

He said that the government should also give tax credits to companies that install energy-saving equipment (similar systems exist in regard to ICT) by giving a fiscal reduction of 200 per cent in the first year. A 70 per cent tax credit should be given to any company that manages to reduce its energy consumption (less the surcharge).

“Another measure could be the introduction of soft loan assistance, covered by a bank guarantee, for companies that are fuel intensive so they can install energy-saving equipment,” said Mr Farrugia.

He also said that Malta Enterprise could offer help to companies by creating new assistance schemes to draft energy-saving plans.

Mr Farrugia said the benefits should also filter through to home-owners who decide to replace older appliances with new energy-saving ones.

The GRTU also wanted a revision of the capping system, he said, as it discriminated against smaller businesses. Rather than a flat benchmark, the system should be worked out on ratios, as this would allow both small and large enterprises to benefit.

Mr Farrugia said that while some of the measures might sound one-sided, the end result would always benefit the exchequer, because if a business does not do well, fewer taxes will be received. On the other hand, if a business does well, more tax is fed into the coffers.

He also called for Enemalta to stop demanding payment for now of the Lm30 million in bad debts that is owed to it, to allow some breathing space. He also called for the introduction of an educational campaign to promote alternative energy which, he said, could be done through EU funding.

Mr Farrugia called for lower electricity rates for small companies who consume power at night. He said another option was for the government to allow brokerage between groups of companies with institutions such as Barclay Capital who can insure them against price hikes. “This is like a hedging agreement. We would pay for an insurance policy and if prices went up, we would be compensated. On the other hand, if prices went down, we would have to compensate the insurers,” he said.

Mr Farrugia also said that the water surcharge needed to be reviewed as consumers were paying over the odds for it. He called for practical measures such as a reduction in fees for low-pollutant vehicles such as mopeds, small motorcycles, electric and hybrid cars as well as car-sharing.

The government could not carry on single-mindedly, said Mr Farrugia. “Something has to be done. It is clear that there has been no consultation at any level on the surcharge issue and this just cannot be accepted,” he said.

He concluded: “It simply isn’t possible that none of our proposals are valid. We hope that the government will take them up and we will also continue with our efforts to see that the European Parliament investigates this issue.”