The Malta Employers' Association has called for a temporary reduction of VAT, reduced tax on post-COVID-19 investment and other fiscal measures in the Budget to help businesses cope with the fallout from the pandemic and facilitate economic recovery.

In a statement issued on Thursday, the MEA said that although the budget, next month, will be  addressing what is essentially a force majeure situation, it
should also act as a catalyst for discussion and planning to shape the economy to move towards higher value-added activities which place quality over quantity.

With the various sectors of the economy having been hit in different way, there was also need for a targeted approach to assist businesses.

In its proposals, the association said:
• The current COVID Wage Supplement Schemes should be extended until
the end of September with more companies being made eligible according to the impact they have suffered;
• National Insurance contributions will be waived for the hardest-hit companies and the period accredited to the employees for pension eligibility. This will make the cost of employment neutral and employees will remain on the books and receive the wage supplement.
• Government should launch a scheme to subsidise commercial rents for six months, particularly those managed by the Malta Industrial Parks.
• The Teleworking Scheme should be extended indefinitely to encourage a
better take-up and implementation of remote working systems. 
• Commercial Energy rates should be reduced.
• Child Care and Summer schools should be in a position to accommodate
all students. 'Many parents are reluctant to return to work, saying that their 
children will still be at home during the summer months, and the situation will
worsen if schools do not open normally in September. Some companies
are experiencing disruption not because of the loss of work caused by the
virus, but because the employees are not turning up for work' the association said.
• Government should introduce re-training schemes and employment
support programmes for persons who lost their job.
• Identity Malta should expedite extension of work permits of third-country nationals who are still in employment when they expire. 'In spite of the crisis, there is still a demand for foreign labour in areas where no Maltese employees are available.'
• Company tax rate will be reduced to 30% for a period of a year, based on
2019 profits.
• Tax incentives for those companies which make investment post-Covid in the coming 12 months, with enhanced incentives channelled towards green economic activities, agriculture and innovation. 
• Government incentives to upgrade the tourism product. 
Call for more government vouchers, reduced VAT, tourism incentives

The association said that although many of the COVID-19 restrictions have been relaxed, and many businesses are open, people may still be reluctant to visit outlets due to the fear factor. A reassurance campaign, combined with strict
enforcement of regulations, will help to change attitudes, it said.

The government, it said, should issue vouchers to be used exclusively in retail and catering outlets. 'Recipient owners will be able to cash vouchers. Under
the circumstances, this will be better than a cash bonus as the funds will
be pumped directly in the economy,' it said. 

VAT rates could also be temporarily reduced to lower prices. "Germany shall be
reducing its VAT rates from 19 to 16%, and that on hospitality from 7% to
5%. It is proposed to reduce VAT to 15% and 5% for hospitality," the association said.

It also pointed out that a reduction in household utility bills would increase disposable income.

It also suggested a rental subsidy scheme to households suffering from
unemployment or a loss in household income of more than 30% as a result
of the Corona crisis.

On ways to address external demand, the association called for a campaign to promote Malta as a safe travel destination and direct incentives to inbound tourists in the coming six months such a. one free night accommodation to visitors spending more than six nights in collective accommodation. Incoming flights could also be subsidised for a limited period.

In other proposals, it called for a  special fund to address national food security
and promote local agricultural products; A national noise reduction strategy; Stronger incentives to switch to electric vehicles and a fund to boost  
innovation and incentivise digitisation. 

Read the MEA dossier and proposals in full by clicking on the pdf below.

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