A fortnight ago, Tonio Fenech, Parliamentary Secretary in the Ministry of Finance and one of the government’s rising stars held a mid-week press conference that on the surface seemed very “run-of-the-mill”, but in actual fact was one in which he delivered very strong messages to the whole country. The press conference was held to inform more than 30,000 people, that as from this year they would not have to submit any income tax form whatsoever – a typical bureaucracy-bashing initiative. However, the conference was really about informing the country specifically, for the first time may I add, about its dismal tax compliance record. We were notified that tax compliance was (very) approximately 65 per cent. Unfortunately, in a country where statistics are very often simply unavailable, Mr Fenech could not afford the numerical accuracy that such a declaration would normally require. I am still not sure what exactly this pronouncement translates into, but I am inclined to think that if government is currently raking in give-or-take Lm200 million in income tax, then Mr Fenech expects that the Treasury should be taking in closer to Lm300 million. In effect, the government is losing about Lm100 million in income tax each year, plus a further Lm20 – Lm 30 million in uncollected Value Added Tax (VAT).

Mr Fenech didn’t stop at delivering his guesstimate. He informed us how tax (non) payers are getting away with a fraud of this magnitude. He did this by coming down very hard on the evasion of VAT, which is in effect a double-whammy for the government, as both VAT and Income Tax escape the tax net. He was unambiguous and decisive in telling his audience (the country that is) that he simply will not tolerate this situation – penalties for evasion must be raised to the point that abuse is seriously deterred. It is understandable why Mr Fenech is out to win the day on this initiative. If the government manages to increase compliance even marginally (say to 75 per cent) then the deficit monster can be tamed and Premier Gonzi can claim the victory that eluded his predecessor at the Ministry of Finance for over a decade.

While I agree completely with Mr Fenech that such abuse must not be tolerated, I believe that his “stick-alone” approach to the problem might not bring him the results this country so urgently requires. To succeed, the government needs to rein in the support of many who, because of circumstances, pay most (if not all) of their taxes. In order to win the support of that section of the public that is tax complaint, he must be in a position to offer them a deal – let me explain. If Mr Borg is earning Lm8,000 per annum and paying all his taxes, then he most probably feels (and is quite right in doing so) that his country is being grossly unfair, skinning him alive on the one hand but then refrains to collect what is due from some others who are earning multiples of his salary but probably declaring as much as him, if not less. For Mr Borg to buy into Tonio Fenech’s mission he must know that when the latter is successful, then he stands a chance of having his tax burden lessened, or his entitlement to public services increased, or a combination of the two. If the government collects more through increased compliance but fails to control much wasteful expenditure, then it will never be able to return something back to those who really deserve it. This, in essence, is half the spirit of the “Fiscal Morality” drive the PN so foolishly abandoned. The other half is the responsibility and thrift that ministers should exercise when they spend our money.

Mr Fenech is on a mission – it is evident that he has made deficit reduction his number one priority. The Greens wish him well in his mission. I am convinced that taxpayers will gauge his success not only by the amount of additional tax he will bring into government coffers, but also by considering from whom these additional taxes are taken, and primarily what prospects exist for those who are compliant to have some of the success showered upon them. However, even if he were successful, I insist that Mr. Fenech is only doing half the job the country pays him to do – let me explain.

Unfortunately, the general perception in our country is that the role of the Ministry of Finance is to collect taxes and spend them. While this is its primary task, it is still half the job. The Ministry is also responsible for setting, monitoring and revising economic policy – the government must have an economic vision for this country. I do not only believe that Mr Fenech is failing in this task – he is hardly even trying. During the last year I have never heard him (or his boss for that matter) make reference to his government’s economic goals – you know, silly things like the inflation rate they should be targeting, the sector-by-sector growth rate they should be expecting (rather than hoping) to achieve, their target unemployment rate over the next three years, the manner in which they should be restructuring our tax systems to kick-start our economy, the sectors in which they are targeting Foreign Direct Investment, and what strategies are in place to contain our trade imbalance. It would be too gratuitous saying that economic policy has taken a back seat, because in my opinion it is not even on board!

One-off references to the Lisbon agenda do not constitute an economic policy. The perception of the success rate of our economy has tragically become dependent upon a few “highly-commended certificates” issued from Brussels from time to time, that get picked up and embellished by NET TV, and are so utterly ignored by the rest of us. It is mind-blowing to think that the news editor at NET TV seriously believes that the shopkeeper and his employed assistant, who have seen their outlet’s turnover diminish substantially over the last four years, give a hoot about what Brussels has to say about the country’s deficit. What these fellows desperately need to hear is what economic initiatives their government is taking to improve business performance.

In all fairness one can appreciate that in the circumstances, sorting out the deficit is one hell of a job, and Mr Fenech may just not have the time for other matters. However, the government has an obligation it is simply shying away from – that of steering the economy out of the economic maltemp (storm) we are in.

In matters economic, the Gonzi-Fenech duo is only offering a strategy of hope – an unfounded confidence that lives on the dream that “everything will sort itself out a few months before the next election!” They are both infected with their party’s quasi-obsession with the brand of neo-liberal political economy that depends on the market to solve every problem. The market may, in the long-run sort many things out. The problem remains that for many, the long run may just be too far away. In the meantime, someone please take charge!

Edward Fenech is spokesperson on Finance, Economic Affairs & Tourism of Alternattiva Demokratika – The Green Party