From Mr V. Spiteri
I refer to your editorial of 13 November.
While the degree of articulation caught my attention, I was equally aware that your concluding paragraph, critical of the Prime Minister, was at best unwarranted, specious and manifestly unfair.
It appears that you only listened to Dr Gonzi’s reply to Dr Sant’s litany of offensive insults, devoid of any constructive ideas.
I firmly believe this, because you would not have been so one sided in your criticism otherwise.
The part played by Dr Sant in the formulation of a new approach to tackle Malta’s perennial budgetary difficulties, carries equal weight in its urgency to enact and enforce unpopular but essential moves that burden taxpayers.
Instead of stirring up resentment with unwarranted criticism, both parties should work for the common good of the nation.
In this it behoves the editor of the Independent on Sunday to be more balanced with his ability to influence people, to accept greater responsibilities and monetary burdens for the collective benefit of Maltese society.
He must not stir up social dissent at a time when all level-headed people urge the Maltese to close ranks so that they can overcome the present challenges together. As the old adage goes there are two sides to every coin.
In as much as on the surface the government appears to not fully understand the implications of its fiscal policies, and is inconclusive on matters of taxation, a second more thoughtful look suggests the opposite.
Take the issue of timing in collecting tax on earned income and the renewed effort in ensuring that taxes are collected. It makes eminent sense for payroll taxes to be automatically deducted by employers, rather than allow employees to report income at year-end. The gain is two-fold.
In the first instance the system allows the national treasury to receive a continuing source of steady income, enabling it to meet expenses without the need to borrow money and having to pay additional interest. Surely this is good for the country.
The second advantage is a more equitable method of gathering tax revenue as people who are employed have less of an opportunity to under declare true earnings.
The downside is that unless better ways are found to tax the more affluent self-employed folks, abuse will continue. Since the bulk of income tax revenue originates from workers rather than owners of businesses, on balance the Treasury will come ahead.
Better to have a half measure, than to hang on to a sieve that allows unreported income to pass through almost unchecked. The present administration is to be applauded for its role in instituting a law that should have been enacted years back, in line with current methods of income tax collection adopted in other EU nations.
Next, your assertion that the shift to pay taxes on the assessed value of a property, rather than on the profit of its sale, would force people to raise their asking price is debatable. In fact the inverse is probably true.
The higher the asking price, the lesser the chance of selling, is a basic rule of economics in a free market. That includes prime residential homes. The dynamics of supply and demand will in fact determine the saleability of real estate property.
The rapid increase of Malta’s population is indicative of a sizeable growing generation of young adults with children, in search of affordable housing. Their needs can only be met by the mass availability of low to moderately priced homes, and not by inflated prices for “choice” properties.
If allowed to go unchecked through government intervention, homes for the bulk of the population can lead to social havoc. With this demographic in mind, prices will likely moderate.
Of the two alternatives, the replacement of a sales tax by a profit tax should generate substantially more income for the authorities, stretched as they are to moderate Malta’s persistent and growing deficit.
It is the government’s responsibility to enforce sound fiscal policies, which take into account the overall well-being of the population, not only for the benefit of people of wealth and disproportionate influence, but for the working class as well. The choices are hard to institute, in that for every winner there is a loser.
The welfare of the nation, rather than the fortunes, popularity of parties and politicians should rule the day. Rather than cry foul in protest over the alleged magnitude and severity of the new tax codes, property owners should be grateful that, in contrast with most other western countries, no annual tax is levied on property ownership.
This is a source of government income based on assessed home and land values, and used to support public schools, road maintenance, pay off taxpayers approved bonds and the infrastructure.
It is probably a matter of time before this treasure source is tapped, as a dependable way to reduce Malta’s deficit. Debt must be honoured, if not by the present generation, then by the next.
Victor Spiteri
ATTARD