For all the government’s efforts trying to pull the wool over people’s eyes saying that only “minor changes” are being made, it was a veritable U-turn the government made on the Property Tax, a humiliating U-turn.

There. It has notched up yet another similarity with Alfred Sant’s government, which is what many detached observers keep feeling this is a second edition of. The only thing that’s left, they quip, is following Dr Sant’s lead and collapsing after 22 months. Two months to go!

Twice in as many weeks, this newspaper had warned government before Budget Day to be wary of the paths that are inevitably taken, year after year, by the Finance mandarins who look at things only for their revenue potential and hang the country. Last year it was the abominable tax on foreign travel (just as people were learning to enjoy going abroad more than once a year) and this time it was property.

There were two basic premises, or temptations, that led the government astray.

For the government, to exchange Income Tax with a withholding tax means that instead of it earning its revenue every two years (one year to declare the income and another year for the tax to be worked out and paid), with the withholding tax the government earns its revenue during the current year, which does wonders to the government’s revenue figures.

Secondly, this government has been tampering with Income Tax and capital gains tax budget after budget and it has never quite got it right.

It also seems that the government had been lobbied quite seriously by some people who must have been holding quite a large number of properties, which they had not put on the market, perhaps because they were afraid of the money they would pay in Income Tax, given the huge difference between the price they paid for the property and the price they expect to get today.

So the government, attracted by the possibility of cashing in on the property market boom (the only real boom in Malta), reasoned that easing the problem by stopping the owners of old property from putting it on the market, and at the same time putting a dampener on those who purchase property to speculate, was a good idea.

It is now clear, with hindsight, that the people at the top (and that means the people at the political level, given that the mandarins do not carry political responsibility) did not think through the full implications of what was being suggested to them. Nor, it would seem, did they consult enough, if they did consult at all!

The result is this humiliating U-turn. As well as the confusion still reigning over the whole issue, as could be seen yesterday when the Prime Minister had to explain it once again on the Saturday morning Radio 101 talk show.

In today’s issue, Alfred Mifsud points out that the whole VAT audit trail was thrown out of the window by allowing property sellers to pay tax as a percentage of sales value rather than as a percentage of taxable profit.

Besides, so many problems cropped up with the change from tax on profit to a sales tax, and so many particular examples started to be raised as, for instance, engaged couples breaking up and having to sell their house, or other reasons like why some people find they have to sell the house within a short space of time, that it seemed we were back in the times of Alfred Sant’s creation of CET on the hoof.

It seems the property sector was not analysed properly before the government started to tinker about with it. It now appears that property speculation is not something done by the big landowners, but also by the many contractors who build a block of flats and sell it, earning themselves a tidy but meagre revenue for the year.

Nor does the government seem to have realised that people faced with a higher tax bill would just add that on to the price of the property thus increasing property prices.

If Malta is supposed to have a free market economy, it is not right for the government to use fiscal policy to tell the market where it must go. And, anyway, those governments who introduced a sales tax all lost office in the next election.

Nor is it right for the government to create a distinction between the Specially Designated Areas and the rest of the country.

Nor is it right for the government to allow people to choose at which rate they want to be taxed.

And, since this was the only tax imposed in the Budget, now the government has had to forego it, where is it going to get the revenue it expected to get from it?

It is sad to see a government caught out not having done its homework properly and being forced by popular outcry to withdraw a Budget measure and change it. It all gives the impression of a shoddy administration which is out of its depth and floundering.

Perhaps this accounts for the extraordinarily bad show put on by the Prime Minister when he replied on Wednesday to the criticism by the Leader of the Opposition. Have we come down to this? All this savaging, this ad hominem argumentation, this playing to the gallery, this type of arguments one more associates with popular and tasteless talk shows than with the House of Representatives?

Is it because the leader of the government knows, deep down, he and his are sinking?