The Malta Independent 16 December 2017, Saturday

The black economy is getting bigger

Thursday, 2 November 2017, 11:17 Last update: about 2 months ago

There is anecdotal evidence to this but perhaps readers and maybe those who should officially care about these things: go to Gozo, said the source, and enter one of the many new restaurants run by Sicilians and you will find they do not take credit cards, sometimes they do not even have a cash register and of course they do not give you a proper receipt. At most, you will get a scribbled note on a piece of paper.

It beggars belief how these things can take place in full sight of one and all, how those who should be on their guard to watch that such things do not happen, still be the last ones to get to know.

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This is not a recent development: it has long been said, half in jest, that Gozo is a 'VAT-free island'.

But then Malta is not any better: it has been also claimed that Malta has the biggest black economy, proportionately speaking, in the EU. And we thought Italy or Greece were worse.

This is at ground level, you cannot get more basic than this. We have been speaking these past days of multi-million scams and fraud systems. These high and mighty scams exist because at ground level people have become used to doing it all by themselves, and not being checked at all. That is how the rot begins.

We may remember the huge conflict in 1995 over the introduction of VAT. A government lost an election because of that. Shopkeepers were so persuaded VAT was dead and buried they actually destroyed their cash registers. Then the incoming government which had promised to do away with VAT was forced to admit that its so-called VAT-without-VAT could not work and was forced to a humiliating defeat.

Since then, VAT has been returned to the statute books but over the intervening years it has been allowed to slide. This does not happen in Gozo only. Get anybody to do work in your house and nobody comes with a VAT receipt.

And tax evasion is not only at the lower ends of society. Doctors do not give out VAT receipts, for instance, as a general rule.

It is clear that tax evasion is not only deleterious to the national finances but also saps what should be the national spirit. People get used to cutting corners and of being free and easy with a law that is insufficiently enforced. And before you notice, people will start playing hooky with far more important laws.

We are not calling for a state of siege or a mentality befitting a totalitarian state. But rules and laws are there to be obeyed and the citizens must learn from childhood that laws are there to be obeyed. 
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