GFSB urges Govt to use ‘measured, balanced’ comms on treaty business impact

The Gibraltar Federation of Small Businesses criticised how the Gibraltar Government responded to what it described as “misinformation” on the transaction tax, warning this could undermine Gibraltar’s collective response to treaty implementation.

In a statement on Tuesday, it called on the Government to ensure its communications were “measured and balanced” and reflected the realities faced by businesses.

The GFSB was reacting after the Gibraltar Government sought to correct “false information” about the effect of the new transaction tax, in particular after some businesses urged customers to place orders before implementation to avoid a 15% increase in prices.

The Government said this was “incorrect and tantamount to consumer fraud”, adding the transaction tax would be paid on importation and calculated on the cost price, not the retail price.

While the transaction tax would start at 15% and rise to 17% in three years, there would also be a reduced rate of 5% on certain products and a super-reduced rate of 0% on others such as food and non-alcoholic drinks, No.6 said.

If necessary, the Government added, it would impose controls to prevent profiteering.

On Tuesday, the GFSB said that, while it was important that businesses provided accurate information to customers, the “tone and framing” of the Government statement risked creating “unnecessary tension” between consumers and local retailers.

“In the lead up to the treaty implementation next month, some businesses have advised customers that they may wish to consider placing orders ahead of the proposed 15% transaction tax and the introduction of additional EU-related tariffs where applicable,” the GFSB said.

“This advice has primarily been offered as a precautionary measure to help customers mitigate or entirely avoid cost increases once the treaty comes into effect.”

“At a time when the business community is already facing significant uncertainty, it is essential that public communications remain measured, balanced and reflective of the realities faced by businesses on the ground.”

“This includes preparing customers for likely price increases, which is an entirely legitimate consequence of businesses adjusting to cope with a significant increase in duties that will be payable under the treaty.”

The GFSB said businesses across Gibraltar were currently navigating a period of uncertainty as they prepared for the implementation of the treaty framework and the associated changes to the duties and customs environment.

“In this context, many businesses are simply trying to provide practical guidance to their customers while they themselves seek clarity on how the new arrangements will operate in practice and assimilating how changes will impact their businesses, including consumer pricing,” the GFSB said.

“Public messaging that is not carefully framed can position consumers against local businesses.”

“That undermines the ability of Gibraltar collectively to meet the challenges that the Treaty presents.”

The GFSB said it remained committed to working constructively with the Government to ensure that the transition to the new system was clearly understood by both businesses and consumers alike.