On multiple occasions, Prime Minister Robert Abela and high ranking members of his administration have stated that they want to introduce important reforms by means of incentives, not by establishing new burdens or penalties. No doubt, this is an admirable aim. Still the question arises: how adequate is such a method in terms of achieving substantial results? Top of the list in this regard comes the traffic sector but as well construction, real estate rentals and the hiring of third country nationals, among others.

In a society grounded on a "free" economy, where the limits to action are not defined clearly and inflexibly, when securing outcomes, only "profit" considerations will apply as the means of guidance and control over decisions, on both an individual and an institutional basis. If the only criterion becomes whether and how "I" can do better - with or without incentives - and not also with or without penalties - then the move towards reforms (as we have been labelling change) will either not happen or else will be so limited that it hardly makes any difference. At least that has been the experience up to now, in the majority of instances.

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FRANCE AND GERMANY

When France and Germany unite to achieve some European goal, the other EU member states are not always necessarily happy. On the other hand, everybody understands that the European project can hardly progress if these two countries are not in syntony with each other.

There had been a certain coolness between Berlin and Paris when Olaf Scholz was German chancellor. The current Chancellor Merz started off with the aim of changing this and in fact, Franco-German discourse became infused with a new cordiality. Soon however different positions emerged, driven by diverging interests - about how to finance major European projects - about the signing of the "free" trade agreement Mercoscur with Latin American countries - and about the project to build in Europe a new generation of fighter aircraft.

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REGARDING VAT

The report "Mind the Gap" published recently by the European Commission analyses the extent to which EU member states, including Malta, are succeeding to reap the taxes due in different sectors. The conclusions it reaches about Malta justify the importance which the Finance Minister began to attach these past years to the tax collection effort,

 It's an area where the island does not compare well with other countries. Malta is among the few which do not present a regular account of the proportion of taxes due that are actually being paid. For VAT then, the estimate is that about 24.2 per cent of dues are not being collected - or 405 million euros annually. That's the second highest rate of VAT loss in the Union, where the average rate of uncollected tax stands at 9.5 per cent.

There is a certain irony in this conclusion. I remember how when the PN government wanted to introduce VAT at all costs, great claims were made that VAT would completely eliminate tax evasion. The finance minister is correct in pushing back against evasion - according to "Mind the Gap", the modernisation of tax administration that is currently being conducted builds on a "relatively" good digitalisation effort.