The government is committed to reviewing Malta’s taxation system in order for it to be one that will stimulate business and trading, said Prime Minister Lawrence Gonzi yesterday.

Dr Gonzi was speaking at a forum meeting for small and medium enterprises at the Corinthia Palace Hotel in Attard yesterday. The prime minister said that Maltese businesses had the ability to adapt and respond and to become more competitive, but said: “The government is looking into the taxation system at present with the view of converting it into one that is more conducive to business,” he said. Dr Gonzi added that the government was working on the proposals with a view of publishing them with the next pre-budget document.

The prime minister said that the government was committed to pulling out of the business sector. “You are far better at business than the government is. Our role is to set an environment that is ripe for trade to take place. We do not want to be your competitors and past experience has shown that governments cannot compete with the private sector,” he said.

He said that the government was also committed to reducing red tape. “We have set up a specialised unit whose sole job is to look into all outdated regulations and simplify them or even scrap them completely,” he said. Another thing which needed to go hand in hand with this, he said, was to reduce costs incurred by businesses.

He said that the reform in Malta’s port operations will definitely have a positive impact on the way things are going. “But costs need to be reduced even further,” he said.

Dr Gonzi also spoke on the need for more use of IT by SMEs in particular. “Before, business owners needed to leave their shop to go and pay a bill or submit a form. Now they can do it all online, but more entrepreneurs need to use IT,” he said, adding that Malta was one of the most advanced countries in the world when it came to e-government.

He also spoke on the need for Malta’s tourism industry employees to offer a better service. “Waiters, cabby drivers, taxi drivers and a whole load of others need to realise that whether they behave rudely or courteously, they are the advert for our country,” he said.

Dr Gonzi also spoke about the electricity surcharge and said that the government’s priority was saving jobs, which was why larger businesses were put into a capping scheme. “The surcharge should be 104 per cent, but the money we have saved from restructuring public entities is being pumped in as a subsidy to try and alleviate the burden. As it stands, it is at 65 per cent,” he said.

Dr Gonzi said that on the upside, Malta had reined in its deficit to below three per cent and had also projected GDP in real terms of 3.1 per cent in the first months of 2006. “We do not want to count our chickens before they hatch, but the economy is showing signs of moving forwards and gaining momentum,” said the prime minister. He also spoke about the introduction of the euro as legal tender and said that it will be a benefit for the whole country. “It will remove the charges that hit all businesses when they come to trade in euros and this should help boost competitiveness,” he said. He appealed for people not to make the euro issue a partisan one.

Dr Gonzi also said that he wanted to dispel a myth that alternative energy was cheaper than fossil energy. “The initial outlay is much higher and people must understand that. That does not mean we will not pursue it, we are determined to in actual fact,” he said.

Dr Gonzi said that Malta’s only viable option was offshore wind farms. He said that while existing technology only allowed their placement in waters of a depth of 25 metres, Malta was making inroads. “Our islands plunge straight down to 50-100 metres depth below the sea, but progress is being made in that regard,” he said. He also said that the government was working hard to try and see how Malta and Gozo could link through Sicily onto the European energy grid.

The meeting was also addressed by Competitiveness Minister Censu Galea and Parliamentary Secretary Edwin Vassallo.