Friday 3 September 2004

4-D eco punch

The Malta Independent

 
A one month delay was all that was necessary for the government to conclude its sardonic exercise in euphemism to launch the eco-contribution. As finally agreed upon it turns out to be just another layer of consumption tax over and above the VAT layer. In reality it is a four dimensional punch of a new consumption tax which insults our intelligence.

Its first dimensional punch is that it is a tax, period. Contribution is something I make of my own free will when I heed the appeals of Kerygma or Strina. This is a fiscal measure which is payable without any choice.` Its being referred to as a contribution is insulting euphemism. Do I have a choice not to drink bottled water` Do I have a choice not to change my car tyres when they wear out, not to buy batteries for my kids toys, not to buy a fridge when the current one exhausts its economic period of use So let`s call it by its proper name. It is a tax and though I appreciate nobody likes to pay taxes, on the other hand if we expect environmental protection we have to pay for it. So what is very offensive more than the tax itself is its being referred to as a contribution. Not to confuse I will henceforth refer to it as fiscal measure.

The second dimensional punch is that it is being falsely sugar coated as a fiscal measure which should be paid quite willingly as it is earmarked to benefit our environmental standards.` How may ask is this happening` We have been told that recycling mechanisms will be studied and launched which will give the consumer the option to avoid paying this fiscal measure if he/she accept to make the little effort necessary to choose recyclable products and to participate in the recycling chain.

Such recycling mechanisms should have been introduced before the eco fiscal measures so that such measures would have acted as a stimulus for consumers to participate in the recycling chain. In the absence of such recycling options the funds generated by the new eco fiscal measure will just be lost in the fiscal wash and one could easily preview that without the necessary funding the promised recycling mechanisms will never see the light of day.

The third dimensional punch is that the consumer will not only be paying the eco fiscal measure which is included without proper distinction in the final price, but will also have to pay the profit margins thereon applied by those producing, importing and distributing the product and in the end also VAT both on the basic eco fiscal measure and on the profit margins layered thereon by the various commercial handlers of the product.` In the end not only the consumer pays the eco fiscal charge but, unlike VAT, he/she has no idea, not even a rough one, of how much is being charged for it. `May be initially one could remember the old price and arrive at the incremental payment by mental subtraction. But memories are short and producers are experts in re-packaging products to make impossible an easy comparison with the old price.

The fourth dimensional punch is to my mind, the most offensive. Not only do consumers have to pay the eco fiscal measure and the margins layered thereon, but there is every justification for doubting whether the fiscal funds would ever arrive to their intended destination.

How could any serious government that has an obligation towards whole society allow itself to be bullied by the GRTU and accept not to charge the fiscal measure on the stocks in hand and not to charge and collect this fiscal measure a the point of importation or, in case of local production, at the factory exit door`

How can the consumer know whether the product he is buying at a higher price is new stock or old stock? And do we really believe that merchants will make such clinical distinction rather than charge all stock at the new rates. Don`t the Authorities know about the business dictum that costing is a science while pricing is an art. An art to price the product, free of pricing controls, at the highest level that the consumer can pay, irrespective of its cost. And now that the consumers` perception has been conditioned to expect price rises by the new tax, the merchants` capacity to mark up prices will increase and will undoubtedly be used.

It is laughable to hear the Authorities proclaiming that no price increases should be expected. Who is going to pay the fiscal measure then? The merchants have taken all precautions to ensure that not only they pass on the fiscal charge down the line to the consumer but also to layer their profit margin thereon. The way the government postponed implementation of the tax to concede to all commercial sector`s demands but has not met and discussed the issue with consumers` representative shows that government consider this as fiscal measure outside the budget which consumers have to pay whether they like it or not.

And the final proof that government has been had by the GRTU is the concession not to pay the new fiscal measure at the point of importation where controls are easy and effective. How could government accept arguments that this would have caused business cash-flow problems when these same importers cash-flow has benefited, as from 1st May 2004, from saving VAT payment at customs clearance stage.  Is there anyone governing the country or is GRTU in charge? 

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