Less than four days before the removal of eco-tax on white goods and electronic equipment it is not yet clear how the measure will affect consumer prices.

While the Environment Ministry says it will reduce costs for importers, retailers are being more cautious, pointing out there may be marginal variations on either side.

The changes will come into force on Tuesday, in line with a legal notice published this month. The eco-tax regime will be replaced by a European directive on waste electrical and electronic equipment (WEEE).

Traders and importers have till the end of this month to join a compliance scheme, which will handle their obligations once the directive comes into force.

Prices always depend on market forces

On certain items like refrigeration and freezing equipment, the removal of the eco contribution will translate into a reduction in expenses varying from €23.29 up to €69.88. In view of this, the Times of Malta tried to establish whether this would result in more affordable prices for consumers.

Environment Minister Leo Brincat did not commit himself, placing the onus on importers and traders.

“Prices always depend on market forces in which this government does not intervene. Yet, the removal of the indicated eco contribution, without introducing another tax, will result in substantial savings for producers (manufacturers and importers), which, quite naturally, are re-invested in human resources, further projects and more competitive prices,” he said.

He stressed the fact that local producers were already subject to a European directive regulating the disposal of electrical and electronic equipment. Hence, the government acceded to their request to axe the eco-tax regime because their complaint of being simultaneously subjected to both tax regimes was deemed justified.

However, the Chamber of Small and Medium Enterprises – GRTU, which has been lobbying against eco-tax for years, insisted the directive never came into force in Malta because of resistance from its members.

“Our objection also stemmed from the fact that the money raised from the eco contribution was not being used to recycle and treat this kind of waste but was just another revenue stream for the government,” the GRTU’s CEO, Abigail Psaila Mamo said.

“In reality, Malta had no choice [but to introduce WEEE now] because it was being fined by the European Commission,” she added.

As for the overall effect on prices, Ms Psaila Mamo said the directive would apply to a number of appliances that were previously exempt from eco-tax.

Consequently, there could be an upward revision in prices.

On the other hand, she pointed out that under the eco-tax regime there was cross subsidisation on certain goods to compensate for those which were exempt. As a result, the level of tax on certain appliances, like refrigerators and television sets, would go down.

“The bottom line is that there will be some marginal movement in the price of certain appliances like shavers, which will increase, while others will become more affordable,” Ms Psaila Mamo said.

Introduced in 2004, the eco contribution was based on the polluter pays principle, through which importers funded the recycling and treatment of a number of items ranging from beverage containers to fridges.

Over the years, businesses strongly objected to the tax arguing that it placed them at a disadvantage with online retailers.

They also complained that the money collected – about €7.8 million a year – went into the government’s coffers rather than into any environmental initiatives.

Goods affected