Thursday, September 22, 2005

Government charges ‘unfair’ - Chamber

* Isola questions Government spending levels

Chamber (Gibraltar Chamber of Commerce) President Peter Isola last night rounded on the Gibraltar Government’s fiscal policy and told his members that the present level of charges on local businesses is “unfair and unnecessary”.

The remarks came as Mr Isola prepared to introduce guest speaker Liam Fox one of the current contenders for the Tory leadership.

And in a gentle call for public debate on the current talks process with Spain Mr Isola said that he was not commenting on this or a possible airport agreement as he lacked information.

“When we do, no doubt there will be a public debate to which we can contribute I certainly hope so,” he said. “We are told they are going well, and very much hope to hear positive announcements before the year end. One doesn’t want to tempt fate but we certainly welcome wholeheartedly the new positive atmosphere prevailing at present which can only be good news for business and Gibraltar.”

A packed Caleta dining hall was told the economy is running well.

“It is firing on all cylinders and the gross domestic product has grown significantly – 8% in money terms in 2003 – and according to the Chief Minister it has risen over 55% in the last 8 years.”

But he said the burning issue for many businesses especially retailers and wholesalers is the cost of doing business in Gibraltar and how this has increased.

“At a time when our economy is doing so well and one may reasonably have anticipated a cut in our costs rather than increases,” he said.

Mr Isola said that at present employment is at record levels, corporate tax receipts are at record levels, gaming tax receipts are at record levels, occupation of commercial properties are at record levels. He quoted the Chief Minister as saying “Government revenue and expenditure are at record levels”. Mr Isola said he assumed that these increases in cost are necessary in order to feed the record levels of recurrent expenditure.

“In the Gibraltar of today we have to ask is Government providing good public services and delivering quality services at a reasonable price? Is it controlling its increasing costs? Not only for today but its future commitments such as pensions which as salaries increase above inflation are an added future burden. Unfortunately it is questionable whether today the answer to that can be yes,” said Mr Isola.

Mr Isola said that Chamber thinks Government requires to exercise restraint in its spending particularly when its spending is recurrent.

“Good financial management of our economy is vital if business is to succeed and support our community for the long term. Increased costs to business will simply make this all the more difficult,” he said. The Private Sector had performed and delivered but Government had failed to consult it over increases to avoid unnecessarily increasing costs particularly in the face of increased competition from businesses in Spain.

The drop in the prompt rate payments discount was decried.

Rate increases are unfair, he said, because rates increase every time a rent is reviewed so a market increase of rates automatically follows a rent increase whenever the Net Annual Value of premises is reassessed.

The introduction of the 10% increase in rates is therefore the market value increase and an additional 10% on top. He argued that Government estimates show an increase is unnecessary and gave the example of places like Europort beginning to contribute more as relief tapers out.

Electricity and Water

On electricity and water tariffs having risen by 12% and 17% this year Mr Isola argued that, although constant for many years they are still high compared to those paid by companies in Spain with whom we have to compete.

“It is difficult to avoid asking the question with our electricity and water charges already much higher than those in Spain and with the fact that we have managed without an increase in electricity and water since the mid eighties why we suddenly have to increase by 12% and 17% respectively.“

Minimum Wage

Mr Isola said that another burden for local businesses was a 12.5% increase in the minimum wage. This was in addition to the 10% increase in employer’s contributions also announced in the budget.

“This increase ripples through all businesses as every tier of the businesses require to increase wages throughout to maintain the different levels. The cost is high,” he said adding that, again, the Chamber had been ignored.

Related Article:

22 September 2005 - Gibraltar part of UK, says Fox

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