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GRTU urges Hon Chris Cardona to assist in its fight against unfair competition
31 May 2016
The issue of unfair competition created by operators that import products and give their services from Sicily to Malta has been going on for almost 10 years. The situation worsened a couple of years ago, an indirect cause of the economic crises, where an unprecedented number of Sicilian economic
operators were negatively affected by the economic downturn and sought refuge in the Maltese market.
There is nothing wrong with economic migration, exports and tapping into foreign markets, that is why Malta joined the EU in the first place, to make use of the single market. When economic operators tap into foreign markets through unfair practices, that put them at an economic advantage, in comparison to local operators the problem becomes a big one.
Maltese businesses report a drop in sales as a direct result of unfair competition from Sicily as high as 30%-50%. The impact this issue has had and is still having on Maltese businesses is terrifying. Maltese businesses have a very hard choice to make,
evade taxes like the Sicilians do to be able to compete or watch their business die out year on year until they close down.
Sicilians do not simply under declare, they also do not charge, and therefore pay, VAT under the pretence that the goods are for export and therefore no VAT is due, since the goods will not yet reach the consumer and therefore are not subject to VAT. 18% is too high a margin and Maltese businesses are undercut, with no chance of competing.
This argument was explained to Hon Chris Cardona, as Minister for the economy, investment and small businesses. GRTU was accompanied by local furniture retailers who told the Minister that they are watching their business slowly go to ruins. They insisted that they will not let their business die out and if need be they will relocate to other EU countries where they can survive. It would be very bad news if Malta had to lose its local businesses, that are today in their second and third generation, because the Government is not capable of addressing such a straight forward issue.
GRTU fails to understand and it is extremely disappointed with the way the authorities are dealing with this issue. The point of entry that is enabling all this is just one and the authorities know this but they still fail to address the issue and hide behind a mountain of excuses.
Both this and the previous administration have failed to address this unjust situation and there is no reasonable justification for this. GRTU had falsely hoped that having two Government commitments in the Budget speech would mean that the situation has changed but this was not to be. The cross sector of businesses this is affecting is significant, these include amongst others but not limited to, furniture, white and brown good, pool services, etc….
As the Minister responsible for SMEs GRTU called on Hon Cardona to help it with his efforts from within the Government, mainly to address inadequate measures taken by the Ministry for Finance so far. The checks conducted by Customs and the measures taken by the Ministry for Finance have not borne any fruit and businesses have felt absolutely no level of change.
GRTU has been through this issue time and again with the Ministry for Finance and their efforts are ineffective. Their resources are wasted finding all the reasons not to do something instead of doing the opposite. The bottom line is that we have a big problem on our hands, a problem Government has recognized and has committed to eradicated budget speech after budget speech. We will no longer entertain excuses. If we do not see results we will go public if need be to exert the necessary pressure. As Minister for SMEs we need your help to make the necessary pressure and solve the issue.
GRTU insisted that a checking system is required for the authorities to know what is coming in through the catamaran both for security purposes and to ensure fair competition. The Authorities have reasonable suspicion to carry out the necessary checks and it is the obligation of the Maltese Government to ensure that VAT is collected and curtail abuse as necessary.
GRTU has made to main proposals as way forward:
- Setting up a task force to eradicate unfair competition – The task force would be composed of the Ministry for Finance, Customs, Inland Revenue The Ministry for Economy and Business, GRTU as well as other necessary stakeholders. Its task would be to take decisions on action to be taken, evaluate results, and oversee the handling of reported abuse.
- Introduce Scanners at the new quay – There is already a scanning/stripping system that is utilized at the Freeport and this should be introduced at the landing point of the catamaran. The system is a random one but it is also an automated one. As such GRTU suggests that either all vehicles coming through drive through the scanner of else an automated system is introduced where vehicles are inspected randomly and based on suspicion.
