So now Eurostat – that arm of the European Union which turns out comparative statistics on EU member states – is telling us we are definitely not the highest taxed nation among the member states. But, and it is a significant but, we are experiencing the highest rise in the tax burden of any other EU member state, which to me and you simply means that over the last 10 years our tax burden has increased by more than anyone else who is a citizen of the EU.
To put a number on it our tax burden increased and is the highest of all the EU member states, a whopping 7.2 per cent of GDP. No wonder salaried people... and those very, very many who still manage to substantially under declare their true incomes are squealing. Because at the end of the day salaries in Malta are very low, so when you talk about taxing income at around 20 per cent when you just earn a measly Lm7,250 plus a year, or 35 per cent when you earn just Lm10,000, you can see, indeed we all feel how very little you are left with.
And while our tax burden is rising substantially...across the EU it is dropping. This is another worrying trend for Malta’s policy makers in this area, who have to deal with the social and political implications of a culture where it is not worth working, but more on that later.
Part of the problem is that we have just about inherited the British system of taxation where our share of indirect taxes is very high indeed. As the report says “Malta relies very heavily on indirect taxes; their share of total tax lies well above the Union’s average (45.1 per cent whereas the EU25 average stands at 38.2 per cent). The overall taxation structure is similar to the UK (indirect taxes, direct taxes, social contributions in a rough 2:2:1 ratio) reflecting the fact that the Maltese tax system has its origin in the former British system.”
Of course, the government is rightly focusing its efforts on job creation and IT but the world does not run on IT gurus alone, although these days you would be forgiven for thinking so. IT is a tool of huge value which we can use across any area of work, but it remains a tool nonetheless.
We have to be careful to also give value to other tools which make for a productive workforce, from good management to well remunerated staff, from staff being in the know to fulfilling everyone’s potential.
I think the majority of the Maltese workforce watching press conference after press conference about IT and IT deals must be a little bemused and switched off, because rightly or wrongly they can’t see this as having huge relevance to them. We are wrong of course, it is important. But government policy makers should also see that it is part of the jigsaw that needs to be presented and not an answer in itself.
IT, to put it crudely, is not going to win any government an election or endear it to its people, now is it? It’s what IT can bring which would encourage the public’s respect. An efficient public service when you go to government office, a fairer system of wardens, a less centralised, more human approach to the problems of everyday living are just examples. But are people experiencing this?
Indeed for the majority of the low paid in Malta salaries just cannot cope with expenses. It is a reality that should be faced and accepted and dealt with. That is why so many choose not to work officially, but take the relief as pocket money and then work on the black market. In this way you can manage. The other way you can’t although this being Malta with our network of family and other support, the cracks take longer to show.
But there are obvious trends. Credit borrowing is up. Loan sharks are having a field day (please remember you and I go to the bank to borrow if we can’t afford something we need, others have no choice but to go to the loan shark). Separations are up because financial strains are biting, but also because I think some people are twigging on to the fact that this is an easy way to get a couple of hundred a month in relief. Separate, register yourselves at different addresses and hey presto, it’s the best pocket money you’ll ever get!
The truth is it is not worth working. Or the difference between a low paid job and relief is almost minimal, and people do what they can to survive.
Those of us who earn enough to pay tax are also stretched. This is what is taxing people’s minds, not Smart cities or privatising Maltacom, and governments should not baulk from discussing and solving these issues too.
Increasingly on people’s minds the main thought is: Come next month, can we cope?