Parliament on Monday continued discussing the bill for the implementation of budget estimates according to the 2007 financial estimates.

In a discussion between Parliamentary Secretary within the Finance Ministry Tonio Fenech and Malta Labour Party deputy leader for parliamentary affairs Charles Mangion which revolved around carousel fraud, vintage cars, eco-tax and defunct financial books which resurrect on the day of appeal, parliament sought to plug various loopholes in sundry tax laws.

One of the amendments passed stipulates that in cases where a registered entity chooses to appeal a judgement requiring it to fork out above Lm500,000 in VAT, interest and administrative penalties, then the appeal shall be held in front of a court presided by three judges, rather than the customary one thus far. Dr Mangion drew the committee’s attention to his opinion that such laws require a certain degree of specialisation by the judiciary, and that the Chief Justice should be aware of what parliament thinks on the matter. Agreeing, Mr Fenech remarked that “it is high time that we have members of the judiciary who are specialised in fiscal and financial law”.

Accountants had better remember where they kept their self-employed clients’ account books, because another amendment passed has made it even harder for registered persons to use their accountants as an excuse. The bill gives the VAT Commissioner further powers to look into ledgers stored electronically, and to clamp down on registered persons under investigation who claim their balance sheets are lost or taken hostage by their accountants, only to produce them as evidence during appeal.

Mr Fenech said that if the books are not produced during the period of assessment, then the courts will be bound not to accept them as evidence on appeal, bar for just causes. Registered people will remain solely responsible for the timely filing of VAT returns and payments and should never let go of their ledgers, added Mr Fenech. If their accountants’ mishandling of business affairs should land them into hot water, then they should sue their accountants to make good for the penalties they would have become liable for.

The VAT Commissioner was also granted the right, by yet another amendment, to demand a guarantee from an individual suspected of engaging in carousel fraud – importing bogus items, popularly computer chips or mobile phones, grabbing the VAT refund cheque and scarpering off abroad without bothering to sell the products and denying government the VAT on sales – before issuing either a VAT number or the refund cheque.

Allaying Dr Mangion’s fears that the VAT department does not have the logistical means to store goods impounded as guarantee, Mr Fenech said that the commissioner will ask for a bank guarantee or a hypothec on immovable property. “Furthermore, if the trader in question nonetheless engages in business before clearance and a VAT number are issued by the department, the trader would be committing a criminal act and the department can institute an action against him,” said Mr Fenech.

By another amendment proposed and passed, the VAT Commissioner no longer needs a judicial act to interrupt a period of prescription, but can do so by sending a ledger statement via registered post. Banks have also been placed under his ever further-reaching arm, as now they are obliged to supply the department with the names and VAT numbers of construction contractors and suppliers who are paid for their work via loans undertaken by the bank’s customers, as well as of the amounts that the beneficiaries have pocketed.

Parliamentary Secretary Fenech confirmed that “the banks are none too pleased that the government is placing the onus on them to supply this information, citing administration costs.” Mr Fenech added that, however, it is about time that the banks, which are profiting so much from the Maltese economy, start giving something back to the same economy by helping fight tax evasion. Dr Mangion applauded the move, and pointed out that in effect, this law is not introducing new burdens on parties engaged in construction, since they have always been expected to issue fiscal receipts for their goods and services.

Mr Fenech pushed through an amendment that specifies that in the case of items on which eco-tax is to be collected, the actual description should prevail over the Harmonised System code, so that if the EU decides to modify the code of a particular commodity without prior warning, that item would still be covered by law, and still be taxable, and the change in HS code would be reflected when parliament updates the relevant schedule.

Not so fast, said Dr Mangion, when the committee came to discuss the legal recognition of vehicles “with four wheels and handlebars”, otherwise known as quad-bikes. Dr Mangion objected to the specification of a “maximum speed of more than 45kph,” asking whether anything that runs marginally slower, even up to 44kph, will be classified as a toy. “God forbid,” he exclaimed, “should we have children of 10 years of age driving such things on our roads!” Mr Fenech claimed that he was not an expert and that to his mind the maximum speed can be brought down. The vote on the amendment was postponed until Mr Fenech confers with the minister responsible.

When it came to vintage cars, the discussion appropriately idled to a more sedate pace and Mr Fenech announced that the two brackets of cars produced before 1970 and 1950, will now include cars manufactured up to 1975 and 1955 respectively, taxes and other details remaining the same. Both sides took time to extol the virtues of the habit of restoring and collecting these past queens of the road, and the committee deferred the discussion of the implementation of budgetary measures to the next session.