When in 2008 the European Commission introduced the Small Business Act for Europe it reiterated its commitment to the “Think Small First” principle in the enactment of all legislation that affects small businesses. When one considers that 91.8 per cent of all enterprises in the EU are micro businesses, which by definition employ less than 10 employees, one understands the importance of implementing this principle to support such businesses.
Bureaucracy is one of the worst enemies of small businesses and despite repeated official declarations that the government intends to tackle this competitiveness dampener, many micro and small businesses claim that more needs to be done to make their life easier. The step taken by the Minister of Fair Competition and Small Businesses, Jason Azzopardi, “to launch a public consultation process on the proposals to amend regulations on commercial licences, aimed at cutting bureaucracy and increasing flexibility” is intended to start easing the administrative burdens on small businesses.
The proposals contain six new measures that should reduce the administrative costs of running a business as well as cut the frustrating red tape that has become endemic in certain aspects of dealing with government departments. A small step was taken in 2011 when as a result of Legal Notice 524 the Commissioner of VAT exempted micro businesses with an annual turnover of less than €7,000 from registering with the department. More needs to be done to encourage more people to be more entrepreneurial.
In Malta, as in the rest of the EU, small and micro enterprises that employ fewer than 50 employees are by far the most common enterprises. SMEs are the engine of the European economy and absolutely indispensable for the creation of jobs. They are often also the cradles of innovation. Besides being the largest group of businesses, micro-entities are also the most vulnerable kind of enterprise, especially in terms of size and resources. This is why it is vitally important that all EU legislation and directives should be SME friendly, as a micro or small enterprise cannot afford to employ staff and other resources to comply with the standards set by the EU.
It will, of course, always be important that the interest of consumers, especially with regards to products and services that have an impact on the health and safety of the public or the protection of the environment, should always be guaranteed. Vigilance on the part of the regulators in the various business sectors should therefore continue to be strict to protect the public. But regulations that affect the running of micro businesses should be kept constantly under review to ensure that they never become oppressive.
Administrative areas that have an impact on the running of micro business that still need to be addressed include the accounting requirements for such businesses. While no one should condone tax evasion that is often associated with micro enterprises that move in and out of the black economy with apparent ease, more favourable tax regimes should be considered for these enterprises. This would ensure that all micro businesses move permanently in the official economy thereby contributing to the important revenue generation function of the state while guaranteeing the legal rights of their workers.
When dealing with business enterprises our legislators and administrators should abandon the paradigm built on the one-size-fits-all approach. Micro and small business can often become unviable if they are burdened with well intentioned but oppressive administrative burdens.