Commitment towards public finance consolidation is positive says Chamber

The Malta Chamber of Commerce, Enterprise and Industry welcomes Government's declared commitment towards public finance consolidation - the schedule to reduce the government deficit and the announced safeguards are positive. In line with its consistent recommendation for a number of years, the Malta Chamber also welcomes the introduction of voluntary third pillar pensions to supplement the current PAYG system. This measure is expected to contribute towards better sustainability of the pensions system and public finances in general.

"That said, it would have been desirable had the time dedicated to consultation between the Ministry and the Social Partners been more dynamically interactive."

The Malta Chamber supports the continuation of income tax burden reduction and is - in principle - in favour of shifting the tax burden from direct to indirect taxes.

"However, it is clear that Malta has a poor track record in enforcing payment of indirect taxes because the country still lacks a fair and effective structure for market surveillance."

In this regard, the Chamber refers to the announced increases in Excise Duties on alcohol and other commodities. "Without the necessary safeguards and enforcement, these increases will fuel further abuse and unfair competition between honest and dishonest operators. For this reason, the Malta Chamber welcomes Government's announced evaluation of Eco-Contribution. The Chamber's stand on the matter is that this tax should be eliminated because, so far, it could not be effectively enforced," the Malta Chamber said.

It notes that the country's fiscal consolidation programme is based on economic growth assumptions which require continuous competitiveness stimuli in order to materialize. In this regard, the Malta Chamber expected the budget speech to contain more measures that address Malta's bottlenecks to growth and facilitate export-led activity. Due to certain inherent weaknesses, the economy has already been emitting early warning signals particularly in cost-competitive sectors and these have been recently pointed out to the MCESD and to Government directly by the Malta Chamber.

Two such measures, for example, refer to the revision of the formula used to calculate COLA with a view to render the system more sustainable as already agreed to between the Social Partners. Another refers to the lowering of electricity tariffs for commercial users with immediate effect by implementing some of the Chamber's practical recommendations such as a wider applicability of night tariffs and bulk discounts which are justified by relatively lower distribution costs.

The Malta Chamber greets announced measures to promote female participation in the labour market particularly through childcare support and the tweaking of tax and fiscal benefit rules to make work pay for certain cohorts of workers.

Measures that support small and micro enterprises are welcomed by the Chamber. These include efforts to address excessive bureaucracy and initiatives that facilitate access to finance such as the extension of the JEREMIE fund, Micro Invest and the introduction of the Hybrid Venture Capital Fund.

The Malta Chamber shall be actively assessing the announced White Paper on the reform in the system of medicines distribution. Indeed, it will be holding a national conference in the coming weeks.