A new tax 'pure and simple' - Mangion

Opposition finance spokesman Charles Mangion said yesterday that the Eco-Contribution Bill introduced a new tax "pure and simple."

This was a measure which had nothing to do with the environment and was not a contribution either, he told parliament at the opening of the debate on the bill.

This bill had nothing to do with the pollution pays principle. Nor would it improve the environment.

Indeed, this was the government which many years ago said it would introduce systems to treat all sewage before its disposal at sea, and all waste would be separated at source. Nothing had happened since.

This bill would do nothing to change the people's patterns and discourage them from dumping practically everywhere, since the people would not recover what they paid for waste disposal. It did nothing to encourage the people to buy environment-friendly products.

One needed to remember that this measure was being introduced just a few months after VAT was raised from 15 to 18 per cent, and many formerly VAT-exempt products, including many medicinals, were now subject to a VAT rate of five per cent. Government revenue from consumption had risen by Lm10 million so far this year.

It was for this reason that no one believed that this eco-contribution had anything to do with the environment.

The government wanted the people to act responsibly in their purchases. But it was not doing the same. One only needed to see how it would spend Lm9 million on a new embassy building in Brussels. At the same time, hospital services were deteriorating with anything from the CT scan to lifts being out of order for a long time.

Public funds were also being squandered by authorities which were supposedly set up to improve efficiency, and now the government was setting up a new authority to administer the eco-tax. And it would saddle the private sector with more bureaucracy.

How could the people believe that revenue from the eco-tax would go to the environment? In the last budget the government promised to channel a portion of its revenue directly for tourism, roads, health and the environment, but nothing had happened.

All agreed that the environment problem needed to be addressed through long term plans agreed in parliament and with the social partners.

But to first enact a law such as this and then set up a commission to suggest how it should be implemented was laughable - a case of putting the cart before the horse.

That this tax was being introduced in a hurry was also evidenced by glaring differences between the Maltese and English texts of the bill. The government was hurrying because there were indications that the deficit by year's end could be higher than projected.

It was for this reason, too, that the privatisation process was being speeded up. Air Malta subsidiaries, which were not making a loss, were to be sold at prices which were far too low. How could one say that the Holiday Inn was only worth Lm3 million? Was this meant to favour somebody? Sea Malta, which was also important for the economy, would also be sold, without adequate guarantees for the future of the link with the European mainland for exporters.

The government also intended to sell its remaining stake in Bank of Valletta, but there was no transparency here either.

The government was saying that the eco-tax would only have an impact of 0.84 per cent on the retail price index. But this tax needed to be seen in the context of the other measures introduced by the government over the past few months, including higher VAT and higher tariffs for a range of items and services which had eroded the people's purchasing power.

What the government should have done through this bill was to encourage a change in consumer patterns, by encouraging the people to use returnable glass bottles, for example.

What would happen in Malta was that the tax would be introduced at the first place but the government "could" allow an exemption when return schemes were introduced.

There was no encouragement for those who bought environment-friendly solar heaters or unleaded petrol or biodiesel. There was nothing to encourage people to use paper packaging instead of plastic. In Europe, products which could be recycled were exempt from the eco-tax.

What the administration needed to do was rein in its spending. While the tourism authority had seen its budget slashed, the Tourism Ministry last year spent Lm80,000 more on travel, but tourist arrivals continued to decline. Indeed, this was a matter common to most ministries.

The government's spending on transport last year increased by Lm75,000 over the previous year, to Lm312,000. So how could the people be convinced that they should shoulder an additional tax burden?

Indeed, the government already collected several environment-related taxes, such as those on fuel, road use, tobacco and commercial activities. Taxation on tobacco and fuel yielded Lm84 million. Surely Lm4 million could have been used for the purposes said to have been earmarked for the eco-contribution?

The new tax, Dr Mangion said, would further undermine industrial competitiveness. Had any calculation been made on what this impact would be?

The bottom line was that the government was incompetent in the management of financial affairs and was continuing to underline this incompetence While the economy contracted and tourism continued to decline, the government, against all logic, was continuing to impose taxation and also sell off important national assets.

Going into various aspects of the bill, Dr Mangion asked the government to specify how the minister would exercise his discretion to exempt some producers from the eco-contribution. He also spoke against the setting up of yet another authority, this time to administer this scheme.

Environment Minister George Pullicino said across the floor that departmental staff would be used for this purpose and no new formal authority would be set up.

Dr Mangion also insisted that administrative discretion should remain subject to scrutiny by the courts. He also called for confidentiality clauses to bind officials of the authority when they evaluated documents produced by producers or importers.

This, he said, was a bill with which the opposition disagreed because it would not bring about an improvement in the environment and was aimed only at raising revenue.