Breathing space for firms that owe VAT

The government has decided to give breathing space to companies that genuinely fall behind in paying their NI and VAT contributions because of cash flow problems, Prime Minister Lawrence Gonzi said yesterday.

Despite the impact on the country's finances, in terms of revenue, the government believes this move will safeguard jobs, Dr Gonzi said.

Earlier this month, Finance Minister Tonio Fenech told Parliament that the government was owed €49.5 million in overdue payments of national insurance contributions owed by 6,631 employers.

In 2008, 1,033 employers were late in their payments, amounting to nearly €3.4 million.

Minister Fenech had also said the government did not plan to hound companies that fell behind with national contribution payments.

The Prime Minister was speaking during a televised press conference in the Nationalist Party's European Parliament electoral campaign. He emphasised solidarity with those who need help as the PN's core value.

"We understand that there are companies which genuinely have cash flow problems and, as a result, fall behind in their payment of contributions. We will give them more time to pay their dues with the final aim of continuing to safeguard jobs. This is how we translate the value of solidarity in practice."

Dr Gonzi said the government was committed to introducing the necessary measures to reduce the deficit to below the three per cent mark of the Gross Domestic Product.

On the European Commission's excessive deficit procedure against Malta - and nine other countries in the eurozone - Dr Gonzi said the country had explained why the deficit had widened as a result of measures to retain jobs and renewed its commitment to bring it down.

Dr Gonzi said solidarity was at the heart of PN policies. The party and the government did not consider their own benefit whenever solidarity needed to be shown.

He said that immigration was an example of solidarity, in that Malta rescued migrants who were in distress. But Malta was carrying an unfair burden in this sector and rightly expected solidarity from the other EU member states.