Fabian Demicoli

Financing Government projects without further endangering our precarious budget deficit position

Use the funds of the tax evaders not of taxpayers – We find it hard to accept that Government continues to finance projects in spite of the continuous warning from the EU Commission that our Budget deficit position cannot take the pressure. What this in practice means is that Malta runs the risk of slowing its economic revival after the recession as support programmes to enterprise will have to be curtailed or, even worse, that austerity measures including increased taxation will have to be introduced to ensure the financial dismal gap is closed as soon as possible.

 

GRTU has never minced its words, one of the reasons as to why the gap widened and why the taxpayer continues to be threatened by new fiscal punishment is evasion. The truth is that the majority of enterprise owners today are law abiding and fulfill their tax obligations including payment of income tax, VAT, ECO tax and social contributions while otters continue to evade unscrupulously and it seems without much pressure from the authorities.

Hardly a month passes that GRTU is not complaining with the tax authorities on the serious problem of tax evasion. The current target is the widespread evasion of ECO taxation. This besides the fact that ECO contribution is a tax that is terribly discriminatory as it taxes products most unfairly. This most incompetent taxation was introduced and has continued to be sustained by the fiscal authorities in spite of its deficiencies. When ECO tax is evaded it almost automatically leads also to VAT evasion and to Income Tax evasion as businessmen who evade ECO tax are not so stupid to then declare an illicit importation for VAT purposes or the profit made on such trading for income tax purposes. The anger of GRTU on this issue has reached boiling point and the tax commissioners know this quite well.

All the millions evaded have not only created a tremendously unfair disleveled business and market structure as the honest trader has to compete with the illicit trader but it has also stifled Government efforts to put up more funds to support small  businesses who in spite of the schemes in action are suffocating due to lack of sufficient money around for support and extended enterprise guarantee schemes, for example.

Worst still is that the money evaded is used in the black market economy or held undeclared here or overseas and the Government is failing to cause these funds to be utilised in the Maltese Economy. When Government issued the last amnesties Ministers incredibly refused GRTU's strong recommendation to issue special bonds or other financial instruments so that these funds would NOT be all dumped on the property market with the consequence that they make the evaders even richer while the honest trader or household owner suffers further as h/she finds it impossible to extend its business premises, grow in other business areas or if a householder, buys a larger house as prices pushed up unnaturally by the ‘invasion of the "amnesty" released previously illicit funds sent this sector into an inflationary spiral unseen before with resultant negative impact for many other economic sectors.

Now Government is at it again. They just financed Air Malta from state funds, our taxpayers funds, and again put our national effort to close the deficit gap at great peril. And we all know don't we that the €57m pumped in Air Malta are not enough. We all know how well Government experts do their projections, don't we all know.

This was a great occasion for Government to create special bonds and cause those who still keep their millions abroad or hidden in Malta to bring them out in the open and amnestied only if the evaders place their funds in the bonds earmarked for Air Malta or for other projects that may be needed to provide the alternative jobs for those who would be made redundant. Why is it GRTU asks that Government always takes the soft option and they are so terrified of those who continuously beat the system? What hold do these people have on Government?

GRTU stands to be counted and we reiterate that we are against the endangering of the deficit further simply because Government cannot come to terms with the speculators who unscrupulously milked the system and continue to be protected while the employees of Air Malta and others in the big sector of small enterprise employment remain under threat because it is always to them that Government turns when things are bad.

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