The government will today, or at the latest on Tuesday, publish a legal notice that will double the tax deduction for the first Lm500 spent on new cash registers, point of sales and software related to the euro changeover, announced yesterday Parliamentary Secretary Tonio Fenech.

This is being done to ensure that the changeover is carried out with the least possible expense for businessmen and professionals, he said.

The scheme is aimed at those people registered with the VAT Department that have a business or a profession. The expenses are related to the purchase, installation or modification of apparatus in view of the changeover to the euro.

The scheme, Mr Fenech explained, permits the declaration of 200 per cent of all expenses involved in the changeover – that is a maximum expense of Lm500 for an allowable deduction of Lm1,000. Such an expense would need to have been carried out between 1 January 2006 and 31 December 2007, and needs to be declared with the income tax return for 2007.

This expense therefore needs to be declared as an expense and not as an increase in assets, he explained.

During his closing speech at a seminar organised by the National Euro Changeover Committee (NECC) and the Chamber of Small and Medium Enterprises (GRTU) on retailing in euro, Mr Fenech stressed that there is no need to change cash registers; however, those who do so can benefit from the scheme.

Mr Fenech commented that Malta, with a GDP of Lm4.5 billion and a population of 400,000 people will be the smallest country in the eurozone. However, the country can easily place as the 11th best economy in the zone. He reminded his audience that the euro is the second strongest currency in the world, poised to become the best in the near future.

The adoption of the euro, said Mr Fenech, presents excellent opportunities for government, retailers and consumers. The new currency will strengthen the economy and attract more investment, especially in a changeover without hitches. He explained that government is doing its utmost not to create inflationary currents. Mr Fenech stressed that the government will continue to monitor the situation even when the euro is introduced.

Retailers, he said, should be innovative in using the change to their own advantage. “Why don’t you give a one per cent discount for next January, to show that the new currency will not push up prices,” enticed Mr Fenech.

Customers will also stand to gain from the euro as they can easily compare prices with other EU countries. This will place a lot of responsibility on retailers, said Mr Fenech, as they will be exposed to scrutiny, especially in the tourism industry. Foreigners can now easily check whether it is worth to spend their holidays in Malta. “Let us probe into our modus operandi and let us make tourists spend more than they have budgeted,” concluded Mr Fenech.

Speaking to The Malta Independent, Mr Fenech praised the FAIR initiative, which is giving incentives to retailers to join in. The campaign is in full swing and has attained the right level. He added that the campaign is also targeting vulnerable groups, with the help of NGOs.

Speaking to this newspaper, GRTU director general Vince Farrugia said Maltese euro coins already have a higher inherent value because the cash at hand on 1 January will be the first issue of the coinage. He explained that tourists will regard a “Maltese euro” as a souvenir to take home, while Maltese would tend to keep the first issue as a memento. To this end, the GRTU has called on the Central Bank to issue more currency in order to service the high demand expected for the euro’s first days in Malta.

Mr Farrugia explained also that GRTU and the government have signed a memorandum of understanding in order to keep track of the situation and iron out any difficulties.

Mr Farrugia said he is strongly against retaining prices in Maltese lira denomination for long after 1 January 2008, as this might work against fostering a euro mentality.

NECC executive director Alan Camilleri gave a presentation over the major difficulties that retailers might encounter.

Mr Camilleri explained that calculators with dual displays will be provided in order to help retailers. He advised retailers to have from three to five times the normal change in their tills in order to be able to meet the demand during the first few days after the euro is introduced. In fact, as from 17 December, retailers can buy Lm55 worth of euro coins.