GRTU seeks 'courageous' budget

The Chamber of Small and Medium Businesses - GRTU wants a "bold" budget that addresses the needs of SMEs and safeguards jobs during the recession.

In its proposals for Budget 2010, GRTU director general Vince Farrugia said the government should assist small businesses, most of which are family-run.

"Unless we stick our necks out we're going to have problems. The government has to prepare a courageous and bold budget, even bolder than in previous years and get the message across that it is four-square behind small enterprises," he said.

He said the government could, for example, allow firms to enjoy moratoria on payments due to the government, such as VAT and income tax, and the same thing would apply to commercial banks. This would enable them to channel funds into new investment, capital restructuring and innovation.

On the cost-of-living adjustment, the GRTU's position is that adopted by the trade unions - that the projected €6.06 compensation should be paid in full. But it also empathises with employers, saying these cannot be made to shoulder all of that cost for their employees.

The government should, therefore, assist, although not directly subsidise COLA payments. It could, for example, give credit on social contributions, he said.

The GRTU proposals are wide-ranging and cover various aspects of the local economy. Most propose tax relief for SMEs and measures which would increase people's spending power through a direct injection of cash.

One of the proposals is for self-employed with a turnover of less than €600,000 to be given the option of paying a withholding tax of three per cent on turnover.

The GRTU also proposed an increase in income tax thresholds to reduce the pressure of the cost of employment for SMEs.

It called for a reform in the penalties and interest on VAT and income tax which were verging on "usury". The VAT law should be changed to allow businessmen to report that they could not pay their dues on time so as to avoid incurring fines which were sometimes higher than the amount they actually owed.

Mr Farrugia predicted that following the recession, the global economy will never return to its pre-recession state, and only countries which make themselves as competitive as possible will be able to succeed.

In this vein, he criticised the government for not investing enough in the areas that matter most. He questioned whether certain projects like the rehabilitation of City Gate and the new public transport project were such a priority in these recessionary times.

Instead, the GRTU is proposing investment in infrastructural projects that would help modernise the country and make it more competitive.

On the public transport reform, Mr Farrugia said the new system had been drawn up "by the elites at the Transport Ministry without any consultation with the GRTU".

Mr Farrugia also mentioned a battle that the GRTU has been fighting for the past three years against credit card fees. He said the government needed to check the charges imposed by the banks on commercial activities.

He also called for the removal of the tax on credit cards, which had been introduced as a temporary measure until VAT was introduced.

"The Malta Financial Services Authority is doing nothing in this regard. It is not monitoring the charges that banks introduce," he said.

Mr Farrugia called for prompt payment by the government to its suppliers and proposed grants to households to enable them to improve their premises to lodge foreign language students.

The GRTU is also calling on the government to repeal the registration tax on passenger coaches and garbage trucks in order to reduce costs and encourage the importation of new, cleaner vehicles.

On the eco contribution, which he described as "the most stupid tax that was ever introduced in Malta", Mr Farrugia said it did not make sense that importers had to pay tax twice. He said this tax had been introduced to make up for the deficit WasteServ accumulated over the years when it was "mismanaged".

When asked, Mr Farrugia said the GRTU was worried about the possibility of an increase in the water and electricity tariffs. He criticised the Malta Resources Authority for not yet having published a study on how the tariffs are calculated.

He said the introduction of night meters would help SMEs substantially: 25 per cent of the electricity billed to supermarkets is for leaving their fridges on at night.