13 December 2006

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Business Today

Enforcing the law

The serious concerns over illegal parallel trading are now certainly grounded on a national plane. This is a national issue which has to be addressed for legitimate Maltese businesspeople, budding entrepreneurs, and small traders everywhere.
Illegal parallel trading is finding avenues through which government is being robbed of its revenues, the coffers robbed of VAT, the environment suffering because it is being robbed of eco contributions, and traders being robbed of a level playing field. By using alternative transportation methods which the authorities are not monitoring to ensure the proper customs clearance, illegal parallel traders are travelling to Sicily, organising mass consignment carriage and returning to Malta without paying their relative dues. They may or may not be licensed traders – they are certainly not paying any dues, VAT, eco tax, haulage fees, and they are illicit traders whose place is not in the European free market many of us have supported.
To the business community, this is a serious affront because it is adulterating the principles of justice which ensure legitimacy and fairness in trading. One of the main reasons to join the European free market was to ensure benefits to consumers who would benefit from this scenario through a set of uniform laws that ensure fair competition. And Maltese businesspeople want to compete, fairly and squarely. Certainly, they are not scared of competition. But what message does this send of Malta’s commercial landscape for those who want to enter business, for those who want to set up legitimate business concerns? Certainly, it is a discouraging one.
But in the current climate, where many of them are weighed down by accumulated government induced costs, licences and taxes, not least to mention the burdensome energy costs, the lack of enforcement on illegal parallel trading is becoming a serious concern. So serious, that hundreds of thousands are expected to leak out of the revenue framework for government, as well as for businesses. This is an issue which requires urgent addressing.
We know that the Prime Minister and his deputy, as well as the parliamentary secretary for finance are well aware of the problem. The Commissioner for Police has also been informed of this situation. Customs too are aware of the problem. But where is the action? Is this government really conscious of the urgency required to deal with this problem.
Business and employers’ organisations have appealed to the highest authorities to ensure a proper market surveillance framework. How can we expect to join the benefits of the European free market when such ‘cowboy’ practices, as aptly described by the Chamber of Commerce’s president, continue to thrive? It is a well known fact that the culprits who are bypassing our legal framework have also been identified, and yet, no action has been taken. Can the business community continue knocking on doors and finding no answer to this predicament?
It is not even solely a business concern. Market surveillance serves as a check on fair pricing and, by extension, a check on just profits. We know that traders who are making use of illegal parallel traders and groupers, can charge the same prices as their competitors and reap the greater profits because they have paid less in consignment charges. That is an insult to the consumer, who can only remain in the dark about the unethical business practices of who sells the goods. In turn, the rightful contributions of these traders to the government coffers, the taxes which serve to keep this country running, are robbed from the consumer and into these traders’ pockets. It is an insult to our sense of respect for the laws of a fair marketplace.
The injustice here is therefore hardly a concern for the business community only – it is a national issue that requires serious attention from the highest authorities.
Enforcement is key – customs have to take ownership of the fact that its role is being undercut because of its absence at points of entry to the island where illegal parallel traders are passing through unnoticed. These traders are effectively boarding their merchandise without presenting manifests of their goods, and the authorities therefore remain in the dark of what is being transported into the island.
We are also aware of the possible importation of foodstuffs into the island, which again, bypass the necessary safety checks and certification. To have such abusive practices persist can produce serious repercussions not only in trade, but also for consumers’ health.
Undeniably, this is a problem which requires more coordination between our authorities, especially customs and the VAT department, in order to eliminate the abuse. But it also requires a greater dedication by government authorities. Many businesspeople who speak to this newspaper complain that their laments fall on deaf ears, that politicians say they are aware of the problem but then hardly follow-up their indulgence with forceful action.
If this way of handling such an urgent issue becomes the hallmark of a government which has crusaded for accession into the European Union, then we are at a loss with the political class. EU membership, if anything, has certainly meant that the government is even more accountable to its citizens and no longer just a patriarchal extension of democracy. With EU laws having given the Maltese people and the business community more onerous obligations to safeguard those principles of justice necessary for free and fair competition and trading, the lack of enforcement of these laws will only make people more disillusioned.

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Editor: Kurt Sansone
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