Retailers blame surcharge for declining sales

The retailers' association has called for a reduction in the electricity surcharge to 40 per cent from next month as a survey shows that an overwhelming majority of members believe it is to blame for declining sales.

The Chamber for Small and Medium Enterprises - GRTU, also suggested reduced rates for electricity used at night in a series of proposals unveiled yesterday in an attempt to mitigate the effect of rising oil prices.

"Action needs to be taken at once because very soon the government will realise that it's going to affect the rate of growth," warned Vince Farrugia, director general of the GRTU.

A survey carried out among 200 GRTU members at the beginning of this month showed that 72 per cent feel the electricity surcharge and the price of fuel led to poor business.

Thirty-seven per cent of businesses that faced losses ranging between 10 and 30 per cent in the first four months of this year blamed the surcharge.

Another 22 per cent who suffered the same losses put the blame on the price of fuel, while 13 per cent feel that both the surcharge and the price of diesel dealt a blow.

Retailers envisage a bleak future. No less than a third of respondents said the situation will worsen throughout the year because of the surcharge.

More than three-quarters of respondents feel the surcharge and the price of fuels has affected consumers and turnover to a large extent. Speaking during a news conference, Mr Farrugia urged fellow constituted bodies and the public to come together to lobby against the surcharge.

In the meantime, the GRTU put forward a series of proposals to the government. It has requested that the surcharge be reduced from 67 per cent to 40 per cent from June 1 and revised downward again in September. It also believes that the water surcharge should be reduced to 10 per cent to reflect the real impact.

A fiscal credit system should be introduced to assist enterprises, while tax credits should be given to those that reduce their consumption of energy.

Through Malta Enterprise, the government should provide soft loans to assist businesses to invest in energy-saving systems. The government could also provide tax exemptions to consumers that opt for energy-saving devices.

The GRTU urged the government to provide incentives which would entitle companies that use a lot of electricity to create "hedging" schemes linked to insurance policies with major financial institutions.

Mr Farrugia asked why no initiatives have been taken to encourage the use of vehicles like mopeds and hybrid cars and called on the government to embark on a campaign to urge the public and enterprise to switch to energy-saving alternatives.

The GRTU yesterday also presented a protest to the European Parliament claiming that the surcharge was in breach of a European directive on electricity. Mr Farrugia expressed his disappointment that a similar protest submitted to the European Commission has not been acted on.

He cautioned the government to stop resting on its laurels on the grounds that the economy had grown last year.

"It did so because of the public sector and due to healthy bank profits. Our sectors didn't grow... and we can already envisage the government panicking at the 11th hour this year because the surcharge will affect economic growth."