Meeting retailers' and consumers' needs

Some people really surprise me when they write in the media sounding as if they are living in another age. At EU level, and increasingly so at a local level, the Chamber of Small and Medium Enterprises - GRTU, as a member of EuroCommerce, the European federation of traders, wholesalers and retailers, implements a policy that what is good for customers is good for retailers.

At the European level, EuroCommerce, where the GRTU is strongly represented, holds regular structured meetings with BEUC - the European consumer organisation. In Malta this does not happen simply because the consumers' national representation is not so effective. Meetings with the Office for Fair Competition and Consumer Affairs are however regularly held. In addition the GRTU has a regular team in all discussions and workshops focused on how to improve customer relations and care and how to strengthen the economic power of consumers.

A retailer or trader does not exist for his own sake but because there is a consumer willing to buy his services. In all its discussions with the government, the GRTU bases its package of solutions on this basic concept.

The Pharmacy of Your Choice (POYC) scheme is a typical example of how the GRTU operates. Pharmacies in the community, represented by the GRTU, are hardly making any additional profit from the operation of POYC. Indeed, they have gone through a heavy expense to be able to offer the services and standards expected under the POYC regime and they are hardly receiving any additional economic gain.

The point of this issue is that consumers were suffering unnecessarily to obtain their medicine entitlement from the few disposing government outlets. The pharmacies in the community have now opened their doors to service these patients, offering them comfort and a more professional service. It's a win-win situation. Most pharmacies are utilising better their excess capacities while the patients and consumers are enjoying the benefits of a system that is more efficient both in terms of the total outlay of the government in the financing of medicine supplies and in the management of the scheme.

The GRTU can mention numerous examples of how in its proposals it aims to provide a better service to consumers. At the end of the day, of course, the retailers, traders or service providers will benefit from increased efficiency, reduced administrative burdens and other costs and benefit economically.

But it is negativism at its worst when people write in the media insinuating that all that the GRTU and its members are interested in is increased profits - and by profits what many of these "snipers" really mean is profiteering.

We all buy services and know that, overall, the standards and quality of retailing and service provision in Malta are improving on a daily basis. The illicit trader, scoundrel and profiteer still exists. But sweeping statements criticising the retail community in general hurts badly considering the millions of euros that Maltese traders, retailers and service providers must spend in order to meet the demands of increasingly-well-informed consumers.

On the issue of taxation on vehicles mentioned by Albert M. Bezzina (Car Tax War Heating Up, April 22), the GRTU is also trying to find a solution that would be beneficial to retailers, traders, consumers and, yes, government finances too. We all pay taxes after all and if the government lands itself in another deficit quagmire all of us will have to pay additional taxes. So it is not just a question of the amount forked out but also of ensuring that a tax is not removed from the back of one and loaded on that of another.

The GRTU represents more than 7,000 members with more than 7,000 outlets, families and employees. These come from different segments and sectors. However, are all consumers and car owners and, therefore, the GRTU has an interest not only in the sector, which at any moment in time can be dealing with a typical issue as is happening now in the case of auto dealers, but must also study the effects of its decisions on other businesses and the consumers in general. It is a fallacy for any serious organisation like the GRTU to think egoistically and disregard the interests of the whole community. We would have learned nothing in these 60 years of existence where we to think and act differently.

The main point for all of us when handling the car registration issue is that we do not devalue abruptly an asset that, for many households, is still very important. If registration taxes were to be cut abruptly, the value of each car on the road would be halved. Auto dealers, who together have millions of euros invested in car stocks, would lose millions and the GRTU would be forced to claim compensation from the government on the same lines it did when VAT was originally introduced and, overnight, traders and retailers were expected to lose millions of liri in the duties and taxes on the stocks then held. No one in one's true senses wants a repeat of this drama.

The GRTU is therefore proposing that the tax that should be first removed is the one that for 10 years it has been labelling as not just unfair but illicit in terms of EU directives. This is the minimum tax imposed on the importation of used vehicles. This is a tax which, irrespective of the hefty 50.5 per cent to 75 per cent registration tax regime, is imposed so that the government ensures that older cars or smaller cars imported at low value will also pay a high tax. This minimum tax must be removed immediately and the agreed taxation percentage should be imposed according to the value of the invoice. The government and, indeed, all of us do not want Malta to become a dumping ground of old cars; this is the fear of those who object to the removal of the minimum tax.

The GRTU also wants a reform of the annual road tax system so that annual fees will be in line with EU directives and lead to a general reduction in air pollution. The GRTU insists that the government should immediately decide on a cut-off date for the new tax regime to be applied.

This should apply first and foremost to the most obnoxious bit of taxation, that is the value added tax (VAT) imposed on the value of the imported car and on the registration tax. This is a tax on tax and the GRTU has been insisting since the day VAT was introduced that this imposition is in breach of the EU directives on VAT.

It should apply also to the minimum tax regime, any changes in registration tax values and changes to road licences.

The issue is indeed more complex than many think and the GRTU is willing to help the government to find a solution that will benefit the consumer when buying a new car, a quality imported used car or any other car from a dealer and the consumer who is not willing to suffer a devaluation of a trade-in price for the car in his/her possession.

The GRTU seeks a solution that will provide benefits to traders and retailers of vehicles, that gives a better choice to consumers, that will not instigate the government to burden us with some other new tax to substitute whatever it loses on revenue from the road vehicle tax reform, and that will be conducive to Malta abiding by the EU environmental protection regimes. It is not easy but it can be done. A solution will be found if none of us offers solutions while wearing blinkers.

Mr Farrugia is director general of the GRTU