The Government wishes to correct false information about the effect of the new transaction tax.

This misinformation has circulated despite the detailed explanations on the subject which have been made available to the general public and to the business community in particular.

The Government is aware that there are commercial establishments which have urged their customers to place orders or make purchases before 10 April in order to avoid a 15% increase in the price of the product.

This is incorrect and tantamount to consumer fraud.

The new tax will not lead to a 15% increase in the retail price of a product simply because it is levied on the cost price and not the sales price.

In other words, the transaction tax is not a Value Added Tax which is paid at the point of sale. Instead, it will be paid on importation of the goods based on the lower cost price to the business.

There can be no justification for a product which retails at £100 to then retail at £115 when new the transaction tax comes into force. If it did, that would constitute blatant profiteering of the worst possible kind.

It is worth recalling that in order to move into a goods and customs union with the EU Customs Union, Gibraltar will need to apply a new tax which will replace import duty. This will be set at the lowest rate in the European Union.

The standard tax will start at 15% in year one and then move to 16% in year 2, ending at 17% in year 3 which is currently the lowest in the EU.

There will also be a reduced rate of 5% on certain products and a super-reduced rate of 0% on others. Food and non-alcoholic drinks are zero rated.

The transaction tax will NOT apply to services only to goods.

The Government will monitor market conditions when the new tax is implemented and may impose controls in order to prevent profiteering.