Eco-tax provisions seen unconstitutional

Opposition environment spokesman Joe Brincat has argued in parliament that sections of the Eco-Contribution Bill were unconstitutional and also violated European law.

Speaking during the debate on the bill in parliament yesterday morning, Dr Brincat observed that an administrative penalty of up to Lm30,000 could be imposed by the government-appointed competent authority which was not independent and was not a court in terms of the constitution. Yet the Constitutional Court had already ruled, in the difensuri tax-xerrejja case, that such fines could only be imposed by a court.

Furthermore, Dr Brincat said, while the authority could impose an administrative fine of Lm30,000, a court, in terms of this bill, could only impose a fine of Lm5,000 following criminal proceedings for violation of this law. What logic was this?

This bill was also unconstitutional where it provided that the minister (responsible for the environment) could amend or revoke in whole or in part, the schedule of eco-contributions. This meant that the minister could raise such tariffs or extend them to new products. This amounted to an imposition of a financial measure, which was the prerogative of parliament.

Dr Brincat observed that the bill provided for appeals from decisions of the competent authority to be heard by an Appeals Board. But the fact that this board would also be set up by the government meant it could not be described as independent, and this was in violation of the European convention on human rights, which laid down that everyone had a right to appeal before an impartial and independent body.

Dr Brincat hit out at the way the bill was drafted. He observed that a careful reading of the schedule showed it was products, not their containers, which were being taxed, more so when bottles were reused.

Interjecting, Environment Minister George Pullicino said the eco contribution would not be paid on each and every product but only when the products were placed on the market. The contribution would be paid at the time of production.

Dr Brincat said the law did not say that the tax had to be paid at the time of importation of bottles, for example. It was the product and not the container which was taxable. It did not say, in the case of water or beverages, that the contribution would be paid once when the bottle was filled the first time.

Dr Brincat said this bill did not provide that the funds it would raise would be chanelled directly to the environment. It did not encourage product recycling and it did not give incentives to consumers to separate their waste.

This was solely a law aimed at raising revenue.

One needed to cut waste, not tax it. In order to improve the environment the government should have made the ordinary citizens its partners, not the victims of a new tax.

Dr Brincat praised Parliamentary Secretary Edwin Vassallo for his comments (reported separately), saying Mr Vassallo was clearly telling the government to tread carefully when it came to imposing more taxes.

Leo Brincat (MLP) said the people would be asked to pay Lm4 million in taxes, called an eco-contribution, at the same time when the government was spending Lm9 million on a new Brussels embassy. This new tax was not motivated by the environment but purely by the government's need to raise revenue. This was taxation by stealth.

This bill would not improve the environment. As The Sunday Times editorial had pointed out, it would not be the polluters who would pay this tax, but everybody.

It would have been better had the government appointed environment wardens to stop dumping or stop those cars which emitted excessive fumes. And, as the Sunday Times had pointed out, what about action against noise pollution?

Proper action against those who really harmed the environment would have yielded the government as much revenue as this so-called eco-tax.

The EU, when it considered introducing a community-wide eco-tax had said that such a tax should encourage innovation and competitiveness. And it told EU governments to take the lead by ensuring that they bought innovative, environment-friendly products. There was nothing of this nature in the bill now before parliament.

A key component of green taxes was that such taxes should be revenue neutral. But the government here was being politically dishonest. It was enacting a tax which would hit everyone, and it was calling it a "contribution" when it was nothing but a tax.

This tax was especially detrimental to couples about to get married, who would need to buy white goods for their homes. How could anyone live without a fridge, a television, a telephone, a washing machine or, indeed, an air conditioner? Indeed, it was a tax which hit everyone. Could anybody drive a car without tyres? It hurt more when one considered that the eco-tax would be charged on products which were already VATable.

The bottom line was that this bill would mean more bureaucracy to producers and importers, and greater costs for consumers. So much for the European Charter on SMEs, discussed in the House last week. What impact would this bill have on businesses? Clearly this tax would be a burden on producers who paid the eco-tax on items which remained unsold.

This bill, Mr Brincat said, would further erode consumer demand and purchasing power, especially when seen in the context of the VAT increase on January 1. The bill would also further dent industrial competitiveness.

Labour MP Joseph Cuschieri said the eco-contribution was nothing but a new tax aimed at raising revenue.

Successive Nationalist governments had been a dismal failure where the environment was concerned, with Maghtab having grown into a waste mountain, valleys abandoned and used for dumping, and beaches contaminated. Waste separation was promised in 1996, when Stanley Zammit was parliamentary secretary, but it was not introduced. To add insult to injury, projects initiated by the Labour government, such as at Chadwick Lakes, were shelved.

Was the government taking some action now due to EU regulations? If this was the case, it was an insult to the people.

Parliamentary Secretary Edwin Vassallo had been right to point out that Malta should not necessarily do what others were doing, but act according to its means. The government, Mr Cuschieri said was with its back to the wall in both the environment and the deficit.

Anglu Farrugia (MLP) said the people and industry could not afford further taxation or bureaucracy, especially so soon after VAT was raised to 18 per cent.

The government had wasted many years doing nothing to improve the environment. Nor had it told the people before the EU referendum that an eco-tax was on the way.

This was a bill aimed solely to raise revenue, as shown by the fact that it did not include measures to encourage the use of environment-friendly products such as solar heaters or bio-diesel. The government was not taking any environment-friendly measures. Perhaps it could have invested in land reclamation for use for solar energy panels. Successful implementation of such a project would eventually lead to lower energy costs and less use of harmful fuel for energy generation.

This bill, Dr Farrugia said, would even tax oil which was the product of recycling.

It did not differentiate between those who polluted the environment and those who did not. In Germany a percentage of the revenue from the eco-contribution was channelled as compensation for social security contributions by small income workers.

Dr Farrugia criticised the way that the eco-tax would be charged on products independently of their value. A microwave cooker costing Lm23 would see its cost rise by Lm10, just as a microwave cooker costing much more.

The Labour MP also objected to the penalties as outlined in the bill. Interjecting, Environment Minister George Pullicino said the penalties would be aligned to those in the VAT law.

Dr Farrugia said that meant that some people could end up in prison, because people who had been unable to pay VAT fines had ended up behind bars.

He also reiterated the opposition's objections to the government appointment of the Appeals Board.

He observed that a person could be fined simply through an official letter, a situation which was unjust and reflected arrogance.

Other speakers will be reported in another issue.