21 April 2004

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The silver lining

Silence is not an option

Tax avoidance and evasion have long been considered a national pastime. Everybody, from top to bottom, seems to indulge in conning the taxman. Indeed some have perfected the ‘trade’ into an art form of sorts.
Hardly considered a sin by Maltese Catholic standards, the complacent attitude towards tax evasion has made it hard for any finance minister to combat.
Over the past five years, however, a concerted effort to close loopholes and curb the illegal activity has reaped some positive results.
Every trade union, constituted body and political party agrees that combating tax evasion is a necessary tool in the fight to bring the deficit under control, even if they may do little about it. Any cross-party commitment is welcome and indeed is a necessity if Malta is going to start to come to terms with its tax collection problems.
When those preaching about the ills of tax evasion are the same people that indulge in it, however, the whole exercise goes up in flames, especially when the culprits hail from the political class supposedly legislating against tax evasion.
For the last two weeks our sister newspaper MaltaToday has published damning evidence that the Malta Labour Party was implicated in tax evasion by its own auditors. A management letter sent to the Labour Party Secretary General last year warned the Party against the practice of not declaring all the salaries paid to full and part time employees.
Despite the severity of the allegation, those in charge at the Labour Party have chosen the road of silence. Questioned again yesterday by this newspaper, Alfred Sant reiterated the ‘no comment’ he gave to MaltaToday last week.
The veil of silence is thick indeed and jars with the stated mission of the party to safeguard social services and pensions. If the rest of society opts to evade taxes like the Labour Party has done, the welfare net that safeguards the weakest in society will face sustainability problems.
The allegations have dented the credibility of the Labour Party, especially when it speaks against the imposition of new taxes and in favour of a crackdown on evasion. The least the MLP’s new administration can do is come clean over the whole affair.
And silence is not an option. On a number of occasions we have supported Labour’s claims for government ministers to shoulder responsibility for wrongdoings that occurred under their wing. Now, it is time for people inside the MLP to shoulder responsibility for the serious allegations made by the auditors.
But the issue is not one solely linked to tax evasion and credibility. It is goes deeper than that. The MLP auditors were clear in their remarks; the party’s media wing was a financial burden on the party.
One Productions owed the social security department Lm280,000 in NI contributions and a further Lm58,000 was owed to the VAT department. The media organisation has a serious cash flow problem that may very well impinge on the viability of employment at Super One. It is well known that several of the TV stations, including Super One, are very late in paying their contributors.
It has long been said that the political TV stations are a burden on their respective parties. The situation at NET TV is probably not much different from that at Super One and both depend heavily on the financing that comes their way from donations collected by the parties.
The constant appeals for cash by the political parties has led to many obvious questions as to who the financial backers might be. None of the political parties list the people who donate money or the amounts given.
This state of affairs requires urgent surgical intervention in the form of legislation that regulates how political parties are financed. In other countries parties are funded according to the number of votes they obtain at an election. The Greens in Malta have often called for a reform of political party financing and the government cannot continue to ignore those pleas indefinitely.
Regulating party financing will not bring an end to abuse, but it will certainly regulate the political minefield that characterises the current situation.
In the long run it may make much more business sense to close the political TV stations, allowing parties to dedicate more time and energy to policy making, which has been sadly sidelined for many years now.
It would be prudent of the political parties to put their own financial houses in order, if for no other reason it would serve as a sign that they can be considered competent enough to run the finances of our country.

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
Tel: (356) 21382741-3, 21382745-6 | Fax: (356) 21385075 | E-mail