this week: Trouble in paradise
Labours dangerous tax cut flop
The Labour Partys proposals to exempt wage earners from income
tax and to pay bonuses in its first two months should it be elected
to government have been the talk of the town. Not everybody spoke about
them using the same terminology certainly, but Malta has been gripped
by tax rebate fever.
In reality, the proposals are so evidently a vote catching exercise
that the temptation to ignore them is great.
What must be clear to everyone is that the proposed Lm25 million tax
cut is but a drop in the ocean when compared to a national GDP of Lm1.7
billion. Considering that, for many people, the tax cuts would mean
Lm5 more in their pockets for two months, the supposed scheme to stimulate
Maltas economy does not stand a snowballs chance in hell.
Added to this is the fact that spending habits may not, in fact, be
altered by the rebates and any extra spending power would most likely
go on imported goods, effectively further weakening Maltas balance
of payments. Such a development would result in a loss of foreign reserves
at the Central Bank, which some experts have calculated at as much as
Lm20 million. Given this, we quickly begin to see the uselessness of
When we realise that most of the Lm25 million would merely help the
economies of those countries we happen to import from rather than our
own, the futility of Labours exercise becomes all the more evident.
The fact that Dr Alfred Sant has played a desperate card in what can
only be seen as a vote catching exercise, must have been evident from
the first moment we saw his artificial smile as he announced the rebates
Malta seems to have a penchant for tax reduction schemes and tax avoidance
and evasion are a national pastime, so Alfred Sants proposals
should not really have taken anyone by surprise. Both Dom Mintoff and
George Borg Olivier, before Sant, liked that sort of game.
Mintoff won narrowly in 1971 and Borg Olivier lost in 1976. Sants
gimmicks must be seen for what they are - useless, if not dangerous.
Indeed it is hard to square the circle when someone so critical of Maltas
handling of its deficit is now, on the eve of the elections, making
a proposal that will make it all the more difficult for Malta to handle
its structural deficit problems. These are the actions of an irresponsible
politician, one who is endangering Maltas chance to join a very
useful economic block in our region.
A politician who has shown that for a few votes one is prepared to put
the entire economy at risk. The sooner we see the end of this the better.