Sant presses government on economic impact of budget measures

Opposition leader Alfred Sant said in Parliament yesterday that it was clear that the government had not calculated the economic impact of the measures it had taken in the budget, such as the increase in the price of kerosene and the excise duty on mobile telephony.

Dr Sant made his remark after he asked Parliamentary Secretary Tonio Fenech to explain the impact of the budget measures in the same way as the government had come out with figures of productivity gains if workers' holidays were reduced.

The exchanges, which started on Monday, were made when Parliament continued to debate a bill to implement the budget measures.

At the beginning of the sitting Dr Sant called on the government to explain its policy on excise duty and VAT because it was resulting that VAT was being imposed on top of the other duties.

Mr Fenech said duty was imposed when a product was imported and VAT was charged on the final price.

Dr Sant asked whether that meant that duty was charged only on imports.

Mr Fenech said duty could also be imposed on other products, such as mobile telephony services.

Dr Sant asked if duty would be fixed or as a percentage.

Mr Fenech said that in the case of kerosene, duty was fixed at a flat rate but in other products, such as mobile telephony, it could be a percentage. Duty was established in the manner which was most practical.

Dr Sant said the government needed to explain how it decided where the duty rate should be fixed and where it should be a percentage.

Mr Fenech reiterated that the decision was based on what was most practicable. International norms had been used.

Dr Sant asked what international norms there were in the case of excise duty on mobile telephony. He did not know of any.

Mr Fenech said that since there was no international example in this case the government had calculated the rate as it thought best.

Dr Sant said the government was being innovative in reducing competitiveness and raising costs, then it wanted workers to take fewer holidays to improve competitiveness.

Mr Fenech said the government had a right to impose systems of taxation and had decided to apply taxation in this way. The MLP had been innovative in the way it had created CET, which had hit all the people.

Dr Sant asked by how much the excise duty on mobile telephony, kerosene and other products would raise the cost of living and affect competitiveness. The government claimed to have calculated the impact of reducing workers' leave, but what about the impact of the other measures?

Mr Fenech said mobile telephony was not considered as an essential item which could impact on the cost of living. The price of kerosene was being raised because so few people were using the product for heating that there was no further need for a government subsidy. True, some commercial establishments were using kerosene, but to subsidise this fuel for them would amount to discrimination against those who used other forms of fuel.

Dr Sant repeated his question on the impact of the government's measures on competitiveness.

Mr Fenech said the studies that had been made involved the families which had used kerosene for heating.

Dr Sant said this meant no study on the general economic impact of the government's measures had been made.

Labour MP Joe Mizzi raised the case of the abusive use of duty-free diesel. He asked by how much the people had been defrauded. There were cases, he said, where documents had been falsified and ships were shown to have taken on fuel when they could not have taken so much fuel on board, and the fuel therefore had gone elsewhere.

Mr Fenech said there was no fraud as the diesel which had been abusively taken for use elsewhere had been seized. Since then the government had totally changed the system of duty-free sales to prevent further abuse, but if Mr Mizzi knew of other cases, he was duty bound to inform the authorities about them.

Mr Mizzi said the government should disclose the names of those involved in the abuse and the amount of fuel involved.

Dr Sant observed that while excise duty was charged on fuel used by Gozo Channel ferries, no such charge was made on outgoing private pleasure seacraft. Surely this burden should be removed from Gozo Channel as well.

Mr Fenech said Malta needed to attract large, private, pleasure seacraft.

Dr Sant said that by that yardstick, duty should be removed from fuel used by vessels on harbour cruises by tourists.

Mr Fenech said the duty charged for Gozo Channel had been higher under Labour, and what that government had done was raise the ferry fees.

Replying, Dr Sant said patients coming to Malta did not use to pay anything. Shamefully, this government was even charging such people.

Mr Fenech said the Gozitans enjoyed various forms of assistance to use the ferries.

Marie Louise Coleiro (MLP) said bakers had suffered from an increase in fuel and flour while customers suffered when the price of bread went up.

Parliamentary secretary Tony Abela said talks had been held with the bakers, and eventually the price order on Maltese bread would be removed.

Ms Coleiro said he hoped that would not result in a flood of cheap imports which would make employees of bakeries redundant.

Noel Farrugia (MLP) said the increase in the price of kerosene would add substantial costs for the poultry industry, which had already seen its output drop substantially.