SME Chamber calls for income tax reduction among proposals to restart the economy

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The SME Chamber has proposed the reduction of income tax to 20% among a series of wide-ranging proposals to support the restoration of economic activity. In a statement, it said that although it welcomed the re-opening of a number of activities, this
resulted in very little economic movement and sales for the shops. “The economic
activity will not be restored on its own, even if businesses are allowed to open, and thus
strong incentives, strategies and campaigns will be necessary to ensure positive
economic activity”, it said.

Following the setting up of an SME taskforce to work on proposals in this regard
together with a wider consultation exercise carried out with members, the Malta
Chamber of SMEs has presented a comprehensive document with proposals of what
Malta needs to start strengthening the economic activity after stalling for two months.

The following are the main highlights of the proposals presented:
1. Income tax brackets to be revised so that income not exceeding Eur 100,000 in
profits are taxed up to 20%.

2. Removal of SISA from consumer goods such as shampoos, perfumes and beauty
products as well as other products such as tires, to reduce prices of such products
and remove the significant bureaucratic burden on the businesses involved, with the
exception of alcohol and tobacco products.

3. Introduction of a special scheme that would tackle rent problems shops are facing.
We are proposing a shared burden for payment of rents by the landlord, the
government and the tenant until there is an improvement is business activity.

4. Conversion of the existing MicroInvest tax credits into cash grants to inject
liquidity into businesses.

5. Re-employment subsidy scheme for persons that have lost their job due to Covid
by covering Eur 500 of their wage for one year upon engagement.

6. Targeted aid for people experiencing problems in affordability through an incentivised spending mechanism by putting in place a grant that covers up to
50% of a spend and capped at Eur 3,000 against VAT receipts for making
tangible investments in existing properties.

7. Revisiting the legal framework to have measures available in times of crisis like
the one we are currently experiencing. This experience has thought us how unfit
certain laws and contracts can be, which leave no way out for private operators
resulting in great distress and long-term damage.

8. Supporting of a campaign incentivizing local production and local purchases to
decrease dependence on imports and encourage consumers to support and
prioritise local businesses.

9. Incentives for businesses for online strategies to continue investing in refining
their online presence and adapting their business models for the modern
technology based society.

10. Lowering bank charges and interest rates for businesses and consumers to limit
loss of funds through such services in a time when investment and spending should
be encouraged. Giving support to smaller banks to be able to compete will also
help the situation.

11. Setting up an immediate, medium and long term plan for Malta’s tourism
strategy. Although the plans should not be set in stone planning for the restart of
safe tourism movements, plans are needed. As an SME Chamber we agree with the
strategy of tourism corridors between Covid safe countries and also Covid tests for
tourists travelling.

12. Incentives for green economy to generate sustainable green jobs and a stronger
concerted effort towards climate change.

13. Special incentives for Gozo to generate more local tourism and investment across
the islands.

14. Earmark investment opportunities that the country needs for businesses to shift
and diversify their interests, to add value to the Maltese economy.

15. The need for the country to adapt to living with Covid or future similar situations.
This includes adapting to long-term strategies for higher sanitisation and hygiene
standards, remote-working, measures to increase productivity levels and sustainable
business strategies.

The Malta Chamber of SMEs said that once the 3 weeks following the start of
the reversing of some measures have elapsed, Malta will be able to take stock of
developments on the health front and consolidate a plan on how the economy will reopen. Certain businesses depend entirely on this information to be able to plan their reentry into the market and get their business going.

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