The Malta Independent 17 June 2024, Monday
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ARMS and the two-tier injustice

Malta Independent Sunday, 27 October 2013, 09:04 Last update: about 11 years ago

I refer to Patricia Graham’s letter entitled “Licensed to ‘bill’”(TMIS, 20 October), which struck a chord or two with me.

It’s been simmering somewhere at the back of my mind for weeks, this thought. Ostensibly, the reason that ARMS bills are made out to the landlord is because of the fear that the tenant will leave the country without paying his/her bill, right? I cannot believe this rationale is legal, but that is what I have been told by various “experts”.

A spokesperson of The Malta Competition and Consumer Affairs Authority said in March 2012: “Service providers impose deposit payments on foreign residents as a safeguard in case the foreign customers leave the island without paying for any pending bills.”

But that’s like saying that everyone should be put in prison because they might commit a crime.

So let’s tar everyone with the same brush, aye, but never mind the uncollected tax revenue from the majority of landlords. 

Is there any landlord out there who actually pays tax? Does the Inland Revenue have records of revenue from rental income? 

Is this a case of “let’s penalize the non-voting, non-Maltese citizens, and the poor, disenfranchised Maltese, who, in all probability, are not even aware of this two-tier tariff?” Instead of alienating the criminal, tax-evading landlords by chasing them for tax on their rental income just because they DO have a vote? 

If all the tax from rental income were collected, what would this amount to? How does this compare to the incorrect, over payment of tenants paying for their consumption of electricity and water at domestic rates?

For those who are unaware, there are two ARMS tariffs: domestic and residential. Residential rates are meant for anyone RESIDENT in Malta; the more expensive domestic rates are designed for owners of multiple properties. 

The rationale behind the more expensive domestic rates is that it does not matter if you pay more when you are not going to spend much time in your second, third property.  

However, this rationale has been subverted because landlords do not want to alert the Inland Revenue to the fact that they have rent-paying tenants in their “second home”.  So, the shameful result is that most tenants end up paying the more expensive domestic rate just so that the landlord can evade tax.

Personally, I think that everyone should pay the same rate. You will always find unscrupulous people making the most of any loophole they find.  

Once non-Maltese tenants have learnt about this scam, they then have the double whammy of trying to convince ARMS that they are resident in Malta.  You see, payslips, your children’s’ school correspondence, your telephony bills are not enough to prove your residence in Malta. For goodness sake, even your rental contract is not enough to convince ARMS that you are resident in Malta!

And this is what I find upsetting: not only do you have unscrupulous landlords taking full advantage of this loophole, you also have a Maltese company aiding and abetting this despicable practice.

So the landlords feel they can behave with impunity and, it seems, they are right to feel this way.

Because if a tenant finds out and refuses to pay for his consumption of water and electricity at the incorrectly applied domestic rate, he will find that he is out on a limb. 

You see, the Maltese legal system allows a landlord to issue a garnishee order against their tenant’s salary and bank account. Even though the ARMS bill is in the landlord’s name, even though ARMS has charged the resident’s consumption of water and electricity at the incorrect domestic rate, even though the landlord has not yet paid the arrears on the account, a tenant can end up in a check-out at a supermarket and be told that their “payment was not authorized”.  And the garnishee is in place while the small claims court deliberate on the merits or otherwise of the landlord’s claim. Which could take years. And, if the tenant wins, he /she might not get their money back immediately because the landlord might appeal the decision. 

It frightens me that nothing is done about something as wrong as this.


Johanna MacRae


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