Issue link: https://maltatoday.uberflip.com/i/1053035
15 services sectors.) If recovered, it would represent 20% of the funds required. This task demands an enormous po- litical will, but the UBI scheme is itself an ambitious project. Another 20% of the required sum is already spent by the government on social services and income substi- tutes: disability and unemployment benefits, pensions, allowances etc. The UBI would come to replace these welfare benefits. The remaining 60%, or €3 billion, would have to come from increased taxation. Since the purpose of this model would be to eradicate financial pov- erty by providing a guaranteed liv- ing income as per current prices, the taxation must not impact the price of base goods. Other- wise, it would defeat the purpose of the scheme. Taxation should therefore focus on non-base goods and services. In speaking about who should be taxed more, let us admit that the lucrative sectors like financial services and gambling will probably not take additional taxation lightly. Financial services specialise on assisting wealthy individuals and corporations to avoid taxation. I imagine that neither would the gambling industry be delighted about the proposal since Malta's tax regime is what keeps them here. Right. In order to implement the ad- ditional taxation carefully and effec- tively, we need to divide the business world into sectors, since various sec- tors benefit differently according to the social environment. We need to identify the sectors that stand to benefit from having more customers and then tailor the taxa- tion adjustment accordingly. The ad- ditional taxation proposal needs to come up with a sophisticated formula by assigning differentiated taxation rates to different sectors. For example, the most obvious can- didate is the entertainment sector. Since a UBI is universal, those receiv- ing it on top of other sources of in- come will likely spend it on entertain- ment and luxury goods. Therefore, entertainment could be taxed higher, as could luxury goods. Once the en- tertainment and other sectors which stand to benefit recognise the advan- tages of the UBI scheme, they would probably embrace the taxation meas- ures. Taxation of lucrative industries is a separate matter. Malta is a small island state with a population of around 450,000 people and a small domestic market. It's in- sular, meaning that goods are trans- ported in and out. All of these condi- tions are disadvantageous for many businesses. The country opted for introducing a low-tax regime in order to overcome national disadvantages such as insularity and a small market size by attracting foreign direct in- vestment. Appealing to foreign investment is necessary, but the effective 5% tax rate is nevertheless phenomenally low. It is also unfair in cases where internation- al businesses compete with national enterprises which are taxed at the full 35% rate. How high can the corporate tax rate go? A doubling would still place Malta in line with other European low-tax jurisdictions. Even a trebling would ensure a competitive placement. Since the introduction of a UBI would benefit Malta's economy, this could also render Malta more attractive for continued foreign direct investment. Thus, increasing the corporate tax rate could be a worthwhile option. It's important to stress that the glob- al neoliberal climate is prone to fa- vour measures such as VAT increase and the redirection of social expendi- ture. Indeed, higher taxation of luxury goods and services, higher corporate taxation and a crackdown on tax eva- sion are far less attractive to the key market players. My concern is that if a UBI were to suit the neoliberal model, the meth- od would probably involve taxation of working-class incomes and base goods. Such a policy would be con- trary to the objectives of the UBI pro- posed here – eradication of financial poverty and sustainable economic ac- tivity stimulus. As an additional source of income, a UBI would also lead to an increase in consumption, meaning that a rate of waste generation would also spike – an ultimate challenge for Malta, given its current state of waste management. Is it possible to introduce a UBI which would be socially and environmentally beneficial in equal measure? A UBI which provides the entire population with a spendable safety net would definitely result in increased consumption. It isn't just waste that would increase – energy and water consumption, and traffic congestion would expand too. That is why the UBI must also aim for stimulating sustainable economic activity. One way of doing so would be to tax enterprises according to the environmental impact, as long as base goods and services are not im- pacted. Conversely, reducing taxation on environmentally beneficial activity would also direct investment and ex- penditure towards these areas. Does the Maltese government consider taking it on board and do other political forces support introducing UBI in Malta? To date, there has not been much discussion about UBI in Malta. Which is strange, given that the current gov- ernment has the political and techni- cal capacity to implement a successful UBI. Besides, the Maltese government is positioning the country ahead of the rest of the planet when it comes to digital technologies like Blockchain and AI. The Prime Minister even spoke about the rights of robots… The current government is pursu- ing an ambitious economic and pro- gressive social policy direction. A UBI would definitely be in synch with that part of Malta's current policy and po- litical climate. Moreover, I am convinced that any government that gets a UBI right is going to be tremendously popular, so, frankly, I do not see a reason why the government and the other political parties would not be willing to address this matter. What is lacking most at this point is the debate. We urgently need more debate. It could even turn out that the Maltese public is abso- lutely indifferent to the subject, in which case the UBI would not happen. Geoffrey Saliba is Malta Business Bureau Sustainable Development Manager and BirdLife Malta Council Member. The views stated in this ar- ticle are his own and do not represent Malta Business Bureau This interview originally appeared on Islesoftheleft.org as part of the Green European Journal's series on Universal Basic Income in Europe maltatoday | SUNDAY • 18 NOVEMBER 2018 NEWS Since the purpose of UBI is to eradicate financial poverty, the taxation must not impact the price of base goods. Otherwise, it would defeat the purpose of the scheme Geoffrey Saliba (centre)