The Malta Independent 20 May 2022, Friday

TMID Editorial: Tax collection and PN populism

Friday, 14 January 2022, 09:18 Last update: about 5 months ago

The state is owed six billion euro in taxes and the Opposition has the gall to criticise the finance minister for saying that companies can no longer get away with not paying tax.

This at a time when one of its own MPs (who has temporarily suspended himself from its parliamentary group) is embroiled in an unpaid tax scandal. Not to mention Bernard Grech’s own tax problems, which were only settled once he entered the race to become party leader.

The argument the PN is making is pathetic, and the timing could not be worse.

The PN has decided to launch an attack on Clyde Caruana, who this week sounded another warning on uncollected tax. This was not the first time that Caruana spoke about the issue of tax evasion and uncollected tax. In a recent interview with The Malta Independent, Caruana had said that businesses cannot continue using the government as an overdraft facility, just because the interest accrued with government is lower than what they would have to pay if they took out a loan.

Caruana had also introduced a number of initiatives to incentivise businesses with tax arrears to settle their dues, including a scheme that would see businesses not pay duty tax on properties they sell in order to generate the cash needed to settle their dues with the taxman. Unfortunately, there was little take-up of those schemes, and the government remains in a position where it is owed a sum triple the annual budget.

Speaking in Parliament this week, Caruana reiterated that there must be a change in mentality where all businesses pay their tax, not just a few of them. By allowing certain companies to default on their tax dues, the government would be allowing an uneven level playing field, discriminating against those businesses who pay their tax bills on time.

But the Opposition, instead of supporting the argument that everyone must pay what us owed, chose the populist route and claimed that Caruana was “threatening” businesses.

It is pertinent to note that the government has introduced a number of schemes to help businesses during these troubled times of pandemic. Apart from the Covid wage supplement and countless other assistance schemes, it had also introduced the tax deferral scheme, which allowed businesses to postpone their tax payments by several months.

But tax cannot be deferred ad eternum. At some point, the government must collect what is due to it. And the Opposition should be supporting such efforts, not opposing them.

Now the Opposition is right on one thing – the government cannot chase after uncollected tax while at the same time issue millions in direct orders and shady contracts. Public spending must be more transparent and just. This is, after all, the same government that allowed one of its former ministers to sign a €100m exit clause in the hospitals privatisation contract. It is the same government that has dished out direct orders, consultancies and board positions like pastizzi.

But one wrong does not justify another. While the Opposition is right on attacking the government over the squandering of public funds, it shouldn’t also attack it on genuine efforts to collect due tax. It’s as if the Opposition is saying it’s OK not to pay your tax because the government is acting irresponsibly with public funds.

The Opposition’s argument is misguided. While it should always speak up against bad governance and mismanagement of taxpayer money, it should never encourage businesses to continue procrastinating on settling their tax dues.

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