Chamber: higher excise taxes require fair and effective enforcement

The Chamber of Commerce has reiterated concerns over the possibility of increased illicit trade, due to higher indirect taxes on tobacco, spirits and beer.

Budget 2014 will see excise duty on machine-made cigarettes, spirits and beer increase: the finance ministry is hoping it will reap €77.8 million on cigarettes, €2.85 million on beer, and €13.6 million on spirits in duties, apart from a staggering €142 million on petroleum duty or 15% over 2013's estimated gains.

The Chamber of Commerce had already voiced its concern over the uncertainty that had prevailed from the possibility of increased indirect taxes.

"Now that the Budget Speech has confirmed increases in excise duties on a variety of products and services including beer, sprits and tobacco products, the Chamber must reiterate its concern on the probability of increased illicit trading into Malta stemming from the country's poor track record in enforcing indirect taxes. The country still lacks a fair and effective system of market surveillance to the detriment of government coffers, the consumer and tax compliant businesses," the Chamber said.

"Without a fair and effective market surveillance system, it is tax-compliant operators who bear the brunt of increased investigations because they present a more convenient target to the authorities.  Meanwhile, these operators need to face unfair competition from illicit traders who - on a daily basis - are allowed to place competing items on the Maltese market without the fulfilment of any fiscal, environmental or consumer safety obligation. This state of affairs is no longer tenable."

The Chamber called for the establishment of a unified entity, responsible for performing organised and effective market surveillance on both fiscal and technical levels, to fight the problem of illicit trade.

"This authority must be armed with the necessary resources and executive powers to be in a position to, once and for all, proactively enforce taxes, laws and regulations on those that operate below the radar and beyond the knowledge of any authority including fiscal," the Chamber said.