For those who remember 1996, it is like watching the re-run of an old film.

There is now evidence that Labour is once again engaged in an exercise to create taxes and make economic decisions on the hoof, making it up as they go along just to fulfil an electoral commitment.

The issue is the Labour Party commitment to halve the electricity surcharge.

At first, everybody understood this as being a commitment to help households. But then owners of small businesses, many of which share electricity meters with their houses, began asking if the commitment to halve the surcharge was meant for their business as well.

The Labour leadership took time to reply, leading to some speculation that the answer would be No.

Then Labour promised a reply by last week and it was announced last Monday.

Speaking on Xarabank on Friday, Labour leader Alfred Sant claimed the proposal relating to small businesses came from the Labour Party and “had always been part of the Labour plan”.

In fact, this newspaper has evidence that shows that the proposal relating to SMEs came from the GRTU, which commissioned a specific report.

Not only that, there is also evidence that GRTU took Dr Sant “to the cleaners” with this proposal because it will mean that businesses will receive even more tax refunds than households will obtain with a reduced surcharge.

“It’s CET all over again,” chortled a GRTU insider.

Why will businesses obtain more in tax refunds than households in surcharge cuts? Because while households will have their surcharge halved without income tax coming into it, businesses will get half the surcharge they pay back as a tax refund. In fact, and invariably, this will be bigger than the comparable savings of a household.

Take, for instance a household and a business both of which receive a Lm150 electricity bill.

For the household the surcharge works out at Lm50 and the household, with the Labour proposal, is Lm25.

For the business, the surcharge also works out to Lm50 but since the Lm25 is considered as a tax credit, its ripple effect on the tax to be paid by the business is bigger.

None other than Vince Farrugia, the GRTU director general, himself confirmed this in an interview that appeared on Wednesday’s l-orizzont. Mr Farrugia claimed that many of the 6,000 SMEs in Malta stand to gain between E4,000 and E23,000 a year.

He claimed, not without reason, that retail outlets use more electricity than households since they have to keep appliances like freezers on night and day and that his organization had long been begging government and Enemalta for some sort of a rebate, to no effect.

Having now persuaded Labour to adopt GRTU’s proposal, it now remains to be seen whether GRTU members will follow by voting Labour in as they did in 1996 when they rejected VAT and plumped for Labour’s CET.

What happened later is well-known: those who dumped their cash registers had to buy a new one and CET turned out to have far worse negative ripple effects. This time round, a Labour government may find that by accepting this GRTU proposal it has forgone far more tax revenues than it planned for.