Chamber of Commerce warns that raising taxes could result in contraband alternatives

The Malta Chamber of Commerce, Enterprise and Industry has warned government that the prospect of raising taxes, such as excise taxes, eco-Contribution and VAT for tax-abiding operators in the upcoming budget, could make contraband a more attractive alternative.

"The prospect of raising the tax differential between Malta and neighbouring Member States is not acceptable to the Malta Chamber because it renders contraband all the more attractive to the detriment of Government Coffers and tax compliant businesses. The compounding effect of Excise Taxes, Eco-Contribution and VAT further adds to the concern of these tax abiding operators," it said in a press statement issued this morning.

The Malta Chamber said it was yet to be given assurances of enforcement measures by the Ministry of Finance, and expressed its concern on the uncertainty over these proposed budgetary measures.

It said that the uncertainty came about as a result of "unclear messages" emerging from the Ministry with regard to increased revenue from indirect taxes being envisaged in an effort to narrow the budget deficit.

"The necessary assurances that enforcement will be stepped up were not forthcoming at the last MCESD meeting - The Malta Council for Economic and Social Development - which was held in the presence of the Minister of Finance. The Chamber notes that the signals emerging from the authorities thus far - including the documents submitted by the Ministry of Finance to the European Commission- have served to heighten rather than dispel such uncertainty," it said.

The Malta Chamber said that such confusion and fear is "justified given Malta's poor record" in enforcing payment of indirect taxes through fair and effective market surveillance. It strongly urged the Minister of Finance to carefully assess the situation before announcing, at the next budget, any measure which could be counter-productive to Government and local businesses.