Electoral promises are being made without consultation, Chamber of SMEs warns

The Malta Chamber of SMEs on Friday added its voice to concerns raised over the increasing number of electoral promises which it said were being announced without any consultation with social partners.

In a statement, it called on political parties to exercise caution over promises that would directly impact employers and businesses.

"Such measures, without proper consultation, affect the business community and would especially and disproportionately affect micro and small enterprises, which make up the absolute majority of businesses in Malta," the chamber said.

It added it was concerned that several of the proposals did little to enhance productivity and address labour shortage, which, when implemented through a blanket approach, might prove unsustainable in practice and have repercussions on both businesses and the business community.

Among others, the chamber believes that, beyond facilitating TCN recruitment through a one-stop shop, there should be a strategic transition to a less labour-intensive model. This includes incentives to maximise the potential of the existing workforce.

The chamber's comments follow its launch of a strategic priority document for the upcoming election called SMEs at the Centre.

Its 33 proposals are based on data from the SME Barometer and extensive consultation.

Currently, 41.8% of businesses identify employee shortages as their primary concern, followed by unfair competition (21.5%). While the country's economy grew, the barometer clearly showed that economic success alone was no longer sufficient.

Key priorities for the chamber:

• A fair playing field and tax reform: a reduction in the corporate tax rate from 35% to 25% across the board, with a 15% deferred tax rate for SMEs that reinvest their profits.
• Total removal of succession taxes: to safeguard family businesses, there should be a total exemption of taxes and document duties on business transfers between family members, treating the family as a single economic nucleus.
• Reforming the legislative framework: the introduction of a mandatory SME test for future legislation to ensure new regulations do not impose a disproportionate burden on micro-enterprises. Additionally, remove audit requirements for micro-businesses with a turnover under €250,000.
• Encourage capital expenditure: with resident deposits reaching €27.4 billion, a business investment scheme would incentivise the public to lend to local SMEs, turning passive savings into productive investment for the local economy.
• Address labour shortage and productivity: a strategic transition to a less labour-intensive model. This includes a productivity tech kit grant and incentives for employee well-being to maximise the potential of the existing workforce.
• A long-term strategy for Gozo: as Gozo’s GDP per capita sits at just 59.8% of the national average, there should be an extension of the Mġarr Harbour and the diversification of Gozo's economy.

The chamber said it remained committed to working alongside any future government to ensure such practical and sustainable solutions were implemented to ensure that Malta remained competitive, resilient and economically sustainable for current and future generations.

"While we recognise that electoral campaigns generate considerable enthusiasm and at times, overly ambitious pledges, we cannot remain passive when such promises have a direct impact on the livelihoods of small businesses and their employees.

"Social partners expect to be consulted in advance on any proposed incentives that may affect SMEs, in line with established practice over the years."