Government wants to aid shops facing online competition

The government plans on tackling the problems retail outlets are facing with the increase in demand of e-commerce.

Prime Minister Joseph Muscat and his wife Michelle yesterday evening hosted a reception with the business community at Villa Francia, the Prime Minister’s official residence in Lija.

Present for the reception, one of several the PM is holding with different sectors, were also Economy Minister Chris Cardona and parliamentary secretary for small business Jose Herrera.

In his address to the businessmen, Muscat tackled a number of current issues, including the Constitutional reform, the economy and retail trade.

While praising economic growth, the Prime Minister acknowledged the ever-increasing competition retail outlets were facing due to online sales. Muscat was quoted as saying the government was seeking ways of how to face this issue.

Half-jokingly, the PM said he hoped that all retail outlets were making use of their cash registers – a comment that sparked laughter among the attendees.

At a recent public debate marking the 10th anniversary of Malta’s EU membership, Muscat argued that while the economy was growing and employment increasing, retail trade was on the decrease. According to Muscat, this was down to the €200 million spent in 2013 on online trade.

Faced by similar questions earlier this year, Finance Minister Edward Scicluna told MaltaToday that online purchases made by the Maltese on such websites as clothing giant Asos or music and book trader Play.com was not being captured in retail trade data.

The Nationalist Opposition has set much store in documenting the drop in retail trade, saying this reflected less spending power and businesses that were not faring well.
“At the moment the numbers do not add up. The expenditure side measure of our gross domestic product, falls short of the income side,” Scicluna said in reply to questions raised by MaltaToday on the matter.

Scicluna plans on seeing the National Statistics Office (NSO) keeping better track of online trade.

The best way to do so would be to survey consumer’s purchases from household surveys – something that already exists given that households are obliged to report all their purchases when surveyed in the Household Budgetary Survey (HBS).

It is now being proposed that data samples from bank transactions and credit cards should also be collected. “The best way is to survey consumer’s purchases from household surveys. Another source which can complement this is to collect data samples from bank transactions and credit cards,” the minister said when asked how NSO could keep better track of online sales.

According to a report by Bloomberg, a number of states in America started collecting an online sales tax. In one of the first efforts to quantify the impact of states accruing more tax revenue from Web purchases, Ohio State University found that sales dropped for Amazon when the online charge was introduced.

“In states that have the tax, households reduced their spending on Amazon by about 10% compared to those in states that don’t have the levy. For online purchases of more than $300, sales fell by 24%,” Bloomberg reported.

Amazon now collects taxes in 21 states, including Florida, California, Texas and New York. Amazon doesn’t charge levies in states where it lacks a physical presence, such as as a warehouse.