Labour to retain VAT

A new Labour government would be retaining Value Added Tax (VAT), according to one of three policy motions approved unanimously by the parliamentary group and the executive council of the Malta Labour Party.

In a meeting held on Friday, the parliamentary group and the executive council unanimously decided that a new Labour government would retain VAT, except "for certain defects and problems that it causes which should be reviewed".

The three policy motions will be presented at the MLP's annual general conference which has to be convened by the end of this month.

The policy motions were announced during a news conference by Labour leader Alfred Sant at the party headquarters in Hamrun yesterday.

Answering questions by reporters, Dr Sant said the Labour Party had taken this long to decide on whether or not to retain VAT because it wanted to see how the tax system worked over a number of years and also to await the final package that the government negotiated with Brussels.

VAT, which had been introduced by a Nationalist government in 1995, was replaced in 1997 after the Labour government, elected in October 1996, introduced a new taxation system called CET. VAT was reintroduced by the Nationalist government on its re-election in September 1998.

The motion proposes that a Labour government would remove the present government's commitment to the EU to impose VAT on food, medicine, medical equipment and printed matter.

VAT rates on certain sectors such as tourism and restaurant food which were causing a negative impact would be revised. Essential services, education, culture and sports would be exempted from VAT.

The VAT thresholds for small businesses, the procedure of VAT refunds and the collection of the tax will also be revised.

Labour would exempt non-profit organisations such as band clubs, philanthropic societies and sports organisations after they are registered under certain conditions.

"VAT had been one of the main factors that had led to a slowdown of the economy," Dr Sant said.

Another motion that will be debated during the party's annual general conference deals with "Partnership - the best choice".

The conference will compare the partnership option with the government's plan to take Malta into Europe.

The motion states that the MLP believes that the partnership option would among other things safeguard jobs for the Maltese and offer new job opportunities, keep down property prices, encourage direct investment, afford protection to agricultural produce, and allow subsidies to the dockyards and other sectors where subsidies are justified socially.

The third motion is called "Creating work and wealth together with Entrepreneurs". The thrust of this motion is that a Labour government would encourage small and medium size enterprises to enhance their business operations and embark on initiatives to create job opportunities.

Answering more questions, including one on the boycott by the Labour Party on programmes produced by Where's Everybody, Dr Sant said that during the Friday meeting, the agenda included the MLP's participation in programmes broadcast by the state television and radio station, Public Broadcasting Services, but he gave no further information.

On the EU, Dr Sant said a new Labour government would retain those things negotiated by the present government which Labour believed were beneficial to Malta but not the rest.

On whether a new Labour government would once again freeze Malta's application to join the EU, he said the question was not whether the application would be frozen or shelved but how the country could be set on the right track to "get it moving".

PN's reaction

Alfred Sant's policy on the European Union is "extreme and wrong", like his eight-year anti-VAT campaign, which he now admits was a mistake, the Nationalist Party said yesterday.

By accepting VAT, the Labour leader's political somersault is another confirmation that his fiscal policy was doomed to failure, a PN statement said.

The CET Dr Sant introduced to replace VAT, and which sometimes reached 29 per cent, had caused the cost of living to rise, business to stagnate, investment to dry up and Government revenue was hit hard.

Dr Sant now admits that he was wrong on trade liberalisation, political parties' participation in local council elections, privatisation and the construction of the new hospital.