House focuses on SMEs

The state of SMEs remained the focus of discussion in Parliament yesterday when the House continued to debate a report on the workings of the Secretariat of the Self-Employed.

Joe Sammut, opposition spokesman on small businesses, said discussion needed to be centred on three main questions - was the government promoting entrepreneurship, was it supporting business and was it creating new jobs?

A constant source of complaint by SMEs was of a shortage of money in circulation, a problem stemming from slow business and the consequences of government measures, such as heavy taxation and poor tourism, he said.

But what was the secretariat of small business doing to, at least, stop more factories and shops from closing down?

What was the secretariat doing to ease tax problems, as well as compliance costs? How would applications for VAT refunds be simplified? Would labour intensive activities be able to enjoy lower VAT, as was the case in other EU countries?

The Tax Compliance Unit had become the source of many complaints. Had the secretariat insisted for more caution in the way the TCU officials reached their conclusions?

Dr Sammut said Malta was being holier than the Pope in the way it interpreted EU regulation as well as in other areas, such enforcement of the eco-tax. This tax was considerably higher here than, say, Spain. This undermined competitiveness.

It may be that some progress was being made at last with regard to the attitude of wardens to small businesses. But why had it taken so long. Was action being taken now because the election was approaching?

Dr Sammut said promises made by the PN to the self-employed had not been kept. Tax on essential items had not been reduced, nor had business costs. Indeed, the opposite was true.

The MLP in its own policy document on the self-employed was promising to make this sector a central cog of economic activity. It was promising priority to eliminating corruption such as that alleged in the case of Mepa and the health department. There were too many complaints of favouritism in the way development applications were handled by the former and the way regulations were enforced by the latter. The law needed to be applied to everyone in all cases, whether it was employment of foreigners or the so-called adult clubs which were not catered for by legislation.

Red-tape too needed to be cut drastically because it was discouraging investors.

Taxation on business would be reviewed because it was excessive, and hounding by tax officials was unfair. VAT or other taxes on labour intensive activities and Maltese crafts should be eased.

A Labour government would give increased importance to accountability and bureaucracy. The activities of the various public agencies would be reviewed and consolidated so that, where possible, clients would be served more efficiently by a one stop shop.

Dr Sammut said small businesses needed to have easier access to finance. There was also need for legislation on the way banks hypoteched property so that there could be fairness and more lively competition in the money market.

There was need for a review in the administration of justice where red-tape and confusion had increased, with a maze of new tribunals and other bodies, some of which did not even sit in Valletta.

Competitiveness Minister Censu Galea said the government had consistently sought to improve the working environment for small businesses, and progress was evident.

The governemnt acknowledged the importance of small businesses for the economy as well as the hard work which many self-employed put in. Consultations with ordinary businessmen and institutions were ongoing, one of the aims being to cut down bureacracy and the abuse of bureacracy.

The report compiled by the secretariat for the self-employed showed how regulations had been amended to make them more business-friendly. It was for this purpose that the Prime Minister in his budget speech last year announced the creation of the Better Regulation Unit.

As EU Commisison president Jose Manoel Barroso had said, what this sector needed was the red carpet, not red tape.

It was important, Mr Galea said, that businesses were kept informed of their rights and what they were eligible for. As much as possible, such sources of information should be centralised. This was something which the unit was working on, and businesses which were misled by a government agency should be eligible for compensation.

The minister observed that Dr Sammut had said nothing about the investment of some Lm3 million made in recent years on the upkeep of industrial parks including new utility services and resurfaced roads. What was shameful was how some people were resorting to vandalism and dumping in these parks.

Mr Galea said much of the government's activity was being conducted in the context of the National Reform Programme aimed at moving Malta closer to the Lisbon Agenda targets. Central to this programme were the sustainablity of government finance, competitiveness, education, training, the environment and job creation. SMEs would benefit from progress under all these headings in the same way as they could contribute for these objectives to be achieved.

SMEs would also benefit from the port reform, currently under way, Mr Galea said.