29 November 2006

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Business Today

Malta Today



Playing the same ball game

The abuse of free movement of goods is hurting the business community

First of all, the Malta Chamber of Commerce and Enterprise reiterates its belief in free trade within the parameters of fair regulation. It recognises the benefits of a competitive market provided this is done on a level playing field.
Within this context, the Malta Chamber of Commerce and Enterprise is following up on its grave concern on the abuse of free movement of goods. Since Malta’s EU membership, this phenomenon has been hurting the business community.
The problem arises from a number of ‘traders’ travelling to EU member states and bringing into Malta merchandise including foodstuffs, detergents, alcohol, and personal healthcare products.
The scope for border control for goods entering Malta from EU member states was eliminated with accession. The resources available at Customs are powerless due to the free circulation concept. The country, therefore, relies on proper market surveillance which is totally absent. This phenomenon is resulting in goods entering into Malta without paying VAT, and any relevant eco-contribution, excise duties or other pertinent taxation.
This problem creates economic complications, particularly in terms of unfair competition, loss of turnover for companies represented by the Chamber and foregone tax revenue for government.
Moreover, one needs to keep in mind that the fact that there is no large variance in the price to the consumer, this practice is not only damaging the law-abiding importers which employ a large number of persons, but also the consumer, as these so-called ‘traders’ are pocketing the tax and contributions which should be payable.
The Chamber has already taken the initiative to organise a meeting with departmental heads of governmental authorities/departments concerned, namely the Department of Customs, VAT Department, Market Surveillance Unit, Consumer and Competition Department, Malta Standards Authority, Port Health Services and the Public Health Department; and is exerting pressure on the authorities concerned to come to a solution to this situation.
Whilst all departments clarified their roles and positions vis-à-vis this situation, there was agreement that this was creating a nationwide economic problem.
The Chamber has proposed the setting up of a task-force armed with legal executive powers to ensure effective market surveillance and enforcement Our proposal is such that this task force would meet regularly and would comprise of the Heads of the governmental authorities/departments concerned. Various legal measures and amendments were also proposed at the above-mentioned meeting which could help lead to better monitoring and enforcement. Closer co-ordination between certain departments such as those concerned with Customs and VAT, in order to eliminate this abuse.
It is imperative that all the authorities concerned not only are aware of the great disadvantage and repercussions of such happenings, but also that something is done about it.
The Chamber was one of the first institutions to support Malta’s EU membership as this meant great advancement for Malta’s social and economic development. It is ironic that now, we are experiencing ‘cowboys’ who not only abuse the European free-trade system, but are doing so to the detriment of the law-abiding entrepreneur who was always loyal to the local consumer.
Indeed, what the Chamber is asking for is a level playing field. Chamber members are not afraid of competition. They thrive on it. What they are against is that this is illicit and operating on different conditions… or worse, no conditions at all.
Ultimately, what we want on behalf of our Members is that we’re all allowed to play the same ball game.

Victor Galea is President of the Malta Chamber of Commerce & Enterprise

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