Bank of Valletta plc has published the 34th edition of the Bank of Valletta Review, featuring four interesting papers.

The first paper, entitled “Taxation Structures in Small States: Revenue Implications following Trade Liberalisation”, has been authored by Mario Borg. This study looks at the taxation structures of small states and analyses the extent to which they differ from those of larger countries. It also discusses the possible tax revenue implications for small states, following a reduction in trade taxes as a result of trade liberalisation, and the eventual move towards income- and consumption-based taxes. This study shows that there is a substantial difference in the taxation structures of small states, depending on their level of development. An important finding presented in the paper is that the proportion of trade tax to total tax revenue is negatively related to the level of development and to the size of the country, while it is positively related to economic openness.

The second paper is entitled “Rationalising Administrative Law on the Revocation of Development Permissions” by Kevin Aquilina. This paper discusses the turbulent development of Maltese administrative law regulating a development permission revocation as it has evolved since 1894 to date. This study deals with the pertinent laws and case law during the past 112 years. Both the legislature and the judiciary sought to bring about legal certainty concerning the law on development permission revocation and the consequences relating to governmental liability and judicial review of administrative action. The end result of these efforts, however, appears to have been the obverse. This aspect of administrative law thus needs to be reviewed in depth so that the applicable law on development permission revocation is suitably reformed.

Another paper entitled “The Price/Book Ratio in Two Maltese Listed Companies”, is presented by Ann Marie Azzopardi. This paper delves into the relationship between the share prices of two locally listed companies and their respective book values by making use of the Price/Book (P/B) Ratio.

This ratio is useful for identifying the extent to which the locally listed companies were overvalued or undervalued in terms of their book values during the period 1992 to 2005.

A weighted P/B Index was purposely constructed to compare each company’s P/B ratio with that of the market and to compute a theoretical price in order to show what a company’s market price would be if, given its book value, it were to have the same P/B value as the whole market.

This study demonstrates that the P/B ratio enables the investor to keep track of how the market is valuing a company when compared to its actual book value.

The fourth paper entitled “Financial Participation of Employees in Malta” and co-authored by Saviour Rizzo and David Borg Carabott, argues that financial participation of employees in Malta has never been part of the ideology or mindset of the social partners.

This practice in some Maltese enterprises does not owe its origin to any specific piece of legislation while its evolutionary path is the result of a series of events in the Maltese political-economic scenario lacking a definite strategy by the government, trade unions and employers.

Consequently, schemes of financial participation of employees among Maltese enterprises are neither well diffused nor broad-based.

The BOV Review provides a useful index of the articles and their respective authors as featured in past issues.

Furthermore, articles from Issue 23 onwards are available online on the BOV website www.bov.com.

For more information or to obtain a hard copy of the BOV Review, kindly contact Victoria Azzopardi of Strategy at Bank of Valletta on tel.: 2275-5779 or by email to: [email protected].