INTRODUCTORY SPEECH BY THE MINISTER OF FINANCE, THE HON JOHN DALLI, ON "INDIRECT TAXATION EXCISE DUTIES"AT THE MALTA TAIEX WEEK SEMINAR

It gives me great satisfaction to be able to introduce today's seminar on Indirect Taxation with particular reference to excise duties. This seminar forms part of a week long programme of activities organised and funded by the Technical Assistance Information Exchange Office, which is part of the Directorate-General "Enlargement" of the European Commission. I must at this point express my gratitude to the Commission for making possible the holding of this Malta TAIEX Week.

TAIEX provides short term technical assistance on approximation and implementation, including the necessary administrative infrastructures, of the Acquis. It follows the priorities as defined by the reinforced pre-accession strategy, in particular the Accession Partnerships and the National Programme on the Adoption of the Acquis.

Excise Duties, together with VAT, fall under Chapter 10 - Taxation, and this Chapter is one of those on which work is proceeding in anticipation of its being opened for negotiations. Today's programme deals with Excise Duties and it could not have fallen at a more appropriate point in time.

During the screening of legislation on excise duties under Chapter 10 a number of discrepancies came to light with particular reference to the definition of excise goods and relative tax structure. These points have since been addressed and the provisions of Bill No. 93, which came into effect on 20^th November (Budget Day) and which was published in the Government Gazette last Tuesday, reflect the changes necessary to harmonise our legislation with the Acquis in this sphere.

Nevertheless, the harmonisation of these tax structures is but one aspect of the relevant Acquis. This has to be seen in the context of a wider network of arrangements, procedures and controls aimed at suppressing as much as possible the potential abuse of the system with the consequent loss of revenue for Member States.

Current Maltese excise legislation does reflect broadly many of the basic principles in the Acquis and various arrangements do follow the directions indicated in the EU legislation, although not to the full extent, or in some cases under a slightly different guise. However, once Membership entails taking on the Acquis in this sector, we must continue to harmonise our legislation with the EU provisions and this also presupposes the enhancement of our administrative and operational infrastructures.

Today's seminar will be dealing with the practical side of things on the basis of the relative legal provisions. It is of the utmost importance that both Customs personnel and those who produce or trade in excise goods are fully aware of the rights and obligations emanating from excise legislation in force. Excise duties are often on the high side and this could possibly increase the propensity towards the perpetration of irregularities and fraud. It is for this reason, that facilitation measures must be counterbalanced by effective controls and enforcement of the regulations. This implies a system of tax warehouses, checks, specific requirements, documentation, tax markings, guarantee and even computerised procedures.

It is essential for the Customs Department to strengthen its operational capacity so as to be able to shoulder fully its responsibilities in this area. At the same time it is equally crucial that producers of, and traders in, excise goods ensure that they operate within the legal framework.

The Customs Department and the traders should look at each other as partners rather then as opponents. This can be achieved if trade facilitation and trust afforded to the traders is reciprocated through a genuine effort by the latter to follow the rules and act correctly. Obviously, this concept applies to all the customers of the Customs Department.

I am certain that the modernization programme within the Customs Department, and the ensuing adaptation of its customers will be to the benefit of all. Today's seminar is a step in that direction.