Any country’s tax system has to reflect the peculiarities and culture of that country. Taxes which work or are unquestioned in one country would create a hullabaloo in the next. In the debate that was and is underway prior to and following the defeat of the Nationalist Party in the local council elections, there has been a lot of mention of taxes and middle classes.

To try and turn this perception around, quite a lot of work has to be done on the detail of certain taxes, taking into account (always!) the culture of the Maltese and Gozitans.

And with three-quarters of us being the owners of at least one property or more, (often uselessly, in terms of income and investment if they are tenanted) this is probably as, if not more, sensitive than income tax in terms of the voting perceptions of the middle class – so cavalier changes are out.

In most of the last budgets I followed, governments were careful not to directly hit income tax. The same care should apply to forms of property taxation, especially when you are talking about families and not business empires (although great care is needed with the business community too, for very obvious reasons related to the whole way the economy motors in this country!)

One moment when this all went clearly wrong was when John Dalli, before he resigned, introduced or was perceived to introduce, an inheritance tax. All hell broke loose. Now, even though more fairness has been restored (although the majority are probably against the whole idea of any form of inheritance tax on property at all) people still do not know it, and countless people mention inheritance tax when I ask them to give me examples of what the PN has done wrong, in the eyes of the middle class at least.

The government and the party really must rethink their media and their whole communications strategy. It all seems to be about ministers going here and there and doing something, whether it’s giving us more IT services or launching a new one, or announcing some statistics

Much more time needs to be spent on explaining bread-and-butter issues through information campaigns. For example, when the inheritance tax issue was improved, it was not enough to just hear one minister making a comment on PBS news. Whatever the grand figures of viewership say for PBS and others, the truth is that many of us have our tellies on at that time (say the 8pm news) but we’re not giving it our whole-hearted attention. So many of us remain incredibly uninformed or even misinformed, thanks to the obvious and understandable negative propaganda from the Labour camp. Incidentally, this is what normal oppositions do everywhere to try and win back power.

The way capital gains tax is working is also unfair. It puts those who have invested in one second property, or who own a summer home, on a par with the speculator or the property developer and this hurts very many ordinary people very badly.

Imagine you bought a property worth Lm10,000 30 years ago – yes, 30 years ago! And you want to sell it for Lm50,000 today. Remember that not all areas have had the same rises in property prices. A flat bought in Sliema all those years ago would be worth much more today. In the last few years, people or speculators have been making profits of Lm40,000 very quickly, sometimes within weeks or months. This is your second home or your only investment.

The government would demand a massive Lm13,000 in capital gains tax. A profit on property made over a few years or 30 years is taxed practically identically, which is just wrong on every count. There is practically no allowance at all for depreciation. So whether you bought a property a year ago and are lucky enough to have made a quick buck, or whether you made this profit over 30 years (just think about it), the government demands a third of your profit in tax.

This just won’t be stomached by many. Some find ways around it by over-declaring for furniture and under-declaring the price and by all the other imaginative ways we Maltese come up with to try and beat the system. Many others give up and don’t sell, reasoning that they would rather leave their property to their kids who would have to pay a more reasonable five per cent inheritance tax on it than sell it now and pay a whopping 35 per cent.

This of course also results in more empty properties and more stagnation among properties which are little bit older, hardly a desirable outcome. One of Malta’s most experienced notaries told me that the changes in the last John Dalli budget did nothing to improve this situation and have just caused stagnation in certain areas.

The government has three years to restore justice in the detail. Someone could give them the key areas of complaint from the Maltese middle classes within minutes. It is essential that the government says it’s going to listen and acts on these justified complaints with urgency. The deficit is very urgent too, but a sense of fair play is a prerequisite to a Nationalist Party re election, difficult though this may appear for now.