I cannot understand Marisa Micallef’s attitude and logic regarding tax due by people on income made from property deals (Justice has to be in the detail – TMID 21 March)

In this country we have such a thing as income tax and people who make an income from selling food, clothes, chandeliers, toilet paper and whatever. All are expected to pay tax on their income from this economic activity. Why should it be different for people who make an income from selling property?

The so-called ‘capital gains tax’ is a misnomer. It is no such thing and I still cannot understand why John Dalli chose to use this obnoxious name for what is simply a payment on account of income tax due on sale of property, affected at the moment the sale is made – much like PAYE.

Moreover there is no ‘capital gains tax’ of 35 per cent. This level of taxation is the highest income tax bracket and one pays it only when and if one reaches that bracket. With the exception of withholding tax on bank interests, everybody pays income tax at the established rates, wherever that income is coming from.

Making property deals in Malta is a side economic activity for people from all walks of life: among others, I have known judges, priests, teachers and scavengers earning appreciable sums of money from this activity. Before the introduction of the system of paying a sum on account of income tax when a contract of sale is made, too many people abused the system and failed to declare this income. In that respect, the system righted an injustice rather than creating one.

For the sake of the argument, may I compare three citizens who have an equal amount of money at the same point of time? Citizen A deposits the money in the bank and gets a small return annually. This return is taxable. Citizen B opens up a business and gets a modest/good return annually. This return is taxable. Citizen C buys a piece of property, sits on it for some time and then gets a fantastic return. Why on earth Citizen C should not be taxed or why taxing him is an ‘injustice’ is beyond me.

Ms Micallef tries to put forward the argument that people who sell their property after 30 years are unjustly taxed. Why? In any case, I do not think that there are so many people who sit on their property for so long, unless – of course – the property is a house that was owner occupied.

Incredibly, in her article, the Housing Authority chairman ignored the point that when one sells a property that he/she was using as his/her personal residence, the profit on the sale is not taxable. Indeed the way her article was written could give the opposite impression, i.e. that such a profit is taxable.

Where Ms Micallef is right is that government needs to make more information campaigns. Her misguided article, alas, proves this point in no uncertain manner.

Michael Falzon A&CE

Naxxar