MEPs as well as government officials who go to Brussels need to be more careful and consider the decisions being taken there, Malta Chamber of SMEs President Paul Abela told The Malta Independent.

This newsroom interviewed both Abela and Chamber of SMEs Council Member Beppe Muscat.

The Chamber President was asked about the EU emissions tax on shipping, which came about through the EU-wide Emissions Trading System (ETS).

Abela said that it has amounted to an increase of around €100 per shipping container. "It is biting already, at the end of the day it's an expense, it's a tax, which has to be paid by the large shipping companies. Obviously, they add it to their cost and pass it on to the consumers."

"When we met the newly-elected MEPs, we said that not only MEPs, but even government officials who go to Brussels need to be more careful and consider the decisions. Whenever there is a decision impacting Malta, they have to delve into the details to see what impact it will have. Even the EU Commission decided that every measure they try to lobby for should have an impact assessment on businesses."

Abela, during the interview, was also asked about a worker shortage for local SMEs, despite a booming population. Abela said: "Our businesses are telling us that there are not enough employees ready to engage in their work, with some of them being unable to expand and invest in their business because of the lack of workforce," he said. "It's a complicated matter and I think it needs to be discussed because the emphasis has been placed on the labour force in only one sector. We have to look at the whole economic chain."

In light of the Prime Minister saying that certain sectors are oversaturated with foreign workers, Abela said it is not right that sectors that did not need more workers brought over third-country nationals. "I think the government has concentrated on courier services, but I think one has to study the other sectors as well."

Abela said that the Chamber of SMEs has spoken to the government and is trying to find a way forward, despite the Identita' scandal being a setback due to its administration of documentation for foreign workers. He said that if this problem is not addressed, the economy as a whole will suffer, and so "it has to be put on the agenda for this budget. The Minister of Finance should address the issue to find a solution."

Regarding the Identita' scandal, Abela said, "any scandal creates a lot of uncertainty and the problem must be solved (...) We have to close the loophole and carry on."

Regarding overpopulation, he said: "This is a problem which doesn't involve party politics. All of us need to find a solution to keep the economy going and ensure a good quality of life." He pointed out the trend of youth going abroad, saying that "there are better prospects overseas and their way of living is more comfortable or more acceptable to the needs of today."

Muscat was asked about the Chamber's proposal to decrease corporate income tax. The Chamber of SMEs wants to reduce the income tax rate for businesses from 35% to 25%.

Muscat said the reduction not only gives businesses more cash flow, resulting in greater investment, but also levels the playing field in Malta and increases compliance with tax payments by businesses, Muscat said when challenged over the proposal.

Asked for the reasoning behind proposing lowered income tax rates for businesses, considering its impact on government funds at a time when focus should be put on reducing the national debt, he said: "We are proposing a decrease of corporate tax from 35%. Now, government has been saying that there is a problem with respect to compliance rates for corporate entities so, in reality, eligibility for this rate is not going to be as widespread as one may think. But even if it is, then we are solving the other problem of compliance as well."

Muscat continued: "Historically, and there have been various cases even locally such as when government lowered the tax on rent and income, when taxes are reduced, tax revenues tend to increase. So, the idea that reducing the tax rate implies that we're going to collect less in tax revenues, historically, does not hold. We also believe that this is important as currently there is an unfair playing field for locally owned businesses," he said, in what was a reference to Malta's 5% corporate tax rate for foreign businesses.

"This proposal also intends to start bridging the gap and making it more of a playing level field."

Muscat added: "If you're lowering tax, you're also leaving more cash flow in businesses and this typically results in greater investment and greater generation and transactions in the economy, which would also allow for job creation."

"This is not something that we've come up with. This is an electoral promise made in the last election and the opposition also had the same proposal, so I'm sure that they agree on it. I'm quite sure they would have done their homework when they made a proposal."

 

The first part of the interview was carried yesterday