The Chamber's contribution to eco-contribution

The Malta Chamber of Commerce and Enterprise has consistently recognised the importance of the environment as a key strategic issue. It supports the move towards sustainable development and is now also in support of the government's declared intention to work hand-in-hand with the private sector to develop initiatives which the country must urgently address. However, these deficiencies are to be addressed equitably and in line with the current competitive realities facing local business.

The chamber made these declarations in its official reactions to the draft Eco-Contribution Act which it submitted to Minister George Pullicino on July 15.

Meanwhile, the chamber has also been consistent in stating publicly that the level of taxation on business and private individuals is excessively high especially when - in the case of business - this is accumulated to government-induced costs, licences, and utility charges. For the consumer, this eco-contribution may be regarded to be equivalent to a consumption tax. The latter have already been raised at the last budget, with an increase of VAT from 15 to 18 per cent. In this regard, the chamber contends that the government should immediately identify areas where costs could be mitigated in order to neutralise the effects of the eco-contribution on business and the consumer in terms of the cost of living.

The chamber set up an ad hoc committee to analyse the Eco-Contribution Bill and its potential implications on the business community. To this end it participated in meetings with the Minister for Rural Affairs and the Environment as well as with the Prime Minister.

The committee will also serve to advise the chamber's representative on the working commission due to be set up. Although it issued a brief statement which appeared in the press on July 15, the chamber refrained from pronouncing itself in detail on the subject before this stage to ensure that it did not prejudice its position during consultation stage. This policy was clearly appreciated by the authorities concerned during the relevant discussions.

The chamber was also party to a statement issued jointly by four employer organisations and three unions after an informal meeting on Saturday, July 24. On this occasion, the constituted bodies singled out the eco-tax as an example of a piece of legislation which was being imposed by the government without adequate consultation. This practice was no longer acceptable to the constituted bodies.

In view of the fact that the environmental situation has reached alarming and seemingly uncontrolled proportions, the chamber has perforce to agree with the principle of eco-contributions. However, throughout the restricted discussions, it strongly objected to the methodology being adopted for the implementation of the law. Furthermore, the chamber noted some apparent inconsistencies and conflicts within the Act which required further discussion. The chamber insisted that these issues be rectified before the draft law was enacted.

Primarily, the chamber did not agree that an eco-contribution should be levied on stocks currently held by business operators. This would have created an unnecessary burden on the companies' administration and an even heavier burden on their cash-flow positions.

The chamber strongly opposed the proposal under which VAT would be levied on the eco-contribution. This would exert a harmful cascading effect on consumer prices.

The chamber also requested clearer guidelines relating to refund procedures for exports and re-exports. These final guidelines were to be in place before the law became effective.

It was maintained that there was an urgent need for reasonable and clear procedures for identifying how products, whether imported and/or locally produced, would be subject to the eco-contribution. This was necessary to ensure that an equitable arrangement was reached. The chamber maintained throughout that this contribution was to be implemented in a non-discriminatory manner. If it were to be implemented according to the "polluter pays principle", there was to be no difference in the treatment of products with identical polluting elements.

Mention was made, during the consultation process, that an amount equivalent to five per cent of the eco-contributions would be appropriated to a specific fund to be applied towards initiatives by producers/importers regarding collection schemes. The chamber remarked, however, that the draft document circulated did not reflect this point.

In relation to the payment of the contribution, the chamber insisted the system would ideally be similar to VAT. In this manner, payments would be effected on a quarterly basis in arrears and on submissions of the relative returns. Such a system should prove to be the least harmful to the cash-flow position of most businesses whilst ascertaining compliance.

The chamber commented positively about the setting up of the proposed commission with representation of the Malta Environment and Planning Authority, the Finance Ministry, Wasteserv and business organisations. Nevertheless, the chamber proposed that, due to the varied business activities sectors represented by each party, the number of representatives should be increased to two from each organisation. Additionally, the chamber acknowledged the potentially important role of this commission and, for the sake of its early and effective functioning, called for clear terms of reference to be agreed to at the earliest possible time.

In conclusion, the chamber expected that the proceeds of the eco-contribution would be well accounted for and exclusively channelled towards their intended purpose with tangible results. Only in this manner would it serve its original purpose of enhancing the consumer's environmental and social responsibilities. The contribution, on its own however, is not the ultimate solution. Education about the benefits of reducing, reusing and recycling play a vital part in solving the country's waste-management predicament.

Mr Apap Bologna is president, Malta Chamber of Commerce and Enterprise.