Issue link: https://maltatoday.uberflip.com/i/1426475
15 NEWS maltatoday | SUNDAY • 7 NOVEMBER 2021 vulnerable behind." Cutajar agrees with the having the rich pay a little bit more tax in the name of more social services and stronger wellbe- ing and sustainability, especially for the poorer off. But then she adds a caveat that this should not "stifle private investment" taht could create additional hardships. And then not by tying governments' hands on tax: "It is up for each national government to choose its course of action and the economic model which works best; it is all well and good if the govern- ment is able to keep sustainable finances, whilst maintaining social and sustainable standards and not introducing new tax- es." Sant concurs with the Great Shift's au- thors that investment is needed to coun- ter growing social inequalities. "Due to COVID-19, plus the slack in- vestment growth since the 2008-2010 financial crisis, and the huge investment requirements needed to meet the chal- lenges posed by the Green Deal and digi- talization, there is a huge need to mobilise public and private investment funds. The question is where will they be coming from." This kind of investment could be fund- ed through the EU's own Resilience and Recovery Fund and from other internal- ly-generated funds created by govern- ments, by being allowed more leeway to borrow. But, as he then adds, this kind of cash could also come from "better har- vesting of taxes due; plus finally more tax- ation hopefully designed in a progressive manner." It also comes down to a familiar prob- lem: effective tax collection and cutting down on practices of avoidance and eva- sion, reflecting the current driver across the EU but also in the United States to impose even stricter anti-money laun- dering rules and on the operations of so- called tax havens. Sant expects this pressure to continue. "However, I doubt whether a wealth tax can fly at all before the anti-tax avoidance strategy has been played to the full and has given or not given results. This is be- cause a wealth tax can only be viable and meaningful if it is applied across Europe." And then it would also need a further extension of legislative and policy frame- works in the fightback against tax evasion, so-called 'aggressive tax planning' and tax avoidance. But Sant does acknowledge the growing gulf between rich and poor. "The rich are getting richer without in- creasing or contributing more investment and initiative, while the poor are getting poorer without having slackened in the effort they undertake to earn a living." Still Sant harbours a suspicion that the budgetary and tax policies of the cen- tre-left parties back in coalition gov- ernments across Europe, will not be so different from those of the centre-right coalitions of the recent past. With social- ists risking being labelled by the right- wing as 'the tax party', Sant thinks the Eu- ropean left could buckle under this kind of pressure. Labour's pride: No new taxes in 8 years In this sense, Malta's Labour has been following a different economic model that also depends on trickle-down eco- nomics, exemplified eight years on from its ascent to power with its latest 'Budget without new taxes'. Agius Saliba sees no contradiction be- tween the advocacy of taxation to achieve social justice among the S&D, and the ab- sence of new taxes in Labour's last budg- ets. "I agree that taxation is a valuable tool which allows the government to generate revenue, redistribute wealth and invest, but one must also look at our socio-eco- nomic scenario." But he sees Labour having managed to incentivise businesses and families to in- vest heavily in the fast-paced growth of the economy through both "liberal and progressive economic policies". "Surely, this success trickles down and still leads to more revenue for the gov- ernment, which is why the government is more interested in targeting tax evasion rather than increasing taxation in gener- al," Agius Saliba said. Sant thinks Labour's fiscal policy is truly tailor-made for the management of Mal- ta's more 'local' realities. And he truly captures the spirits of Malta's position in the global tax order – just like the air- port that serves the passage of labour mi- grants, Malta is a parking bay for remitted profits from overseas. "Our economy relies on a deep sub-stra- tum of what I call 'hot money': funds which are parked here for a while or in transit to elsewhere. Should there be a sense that this traffic will be subject to some higher taxation compared to levels prevailing elsewhere, or that the costs of keeping them garaged here will rise, these holdings will be tempted to leave or in- crease their velocity of passage." Sant this is a pragmatic concern, and that it has nothing to with the S&D's dis- course on tax as an instrument for redis- tribution or green transition. "The latter is addressing the overall European situ- ation. The political discourse in Malta is addressing the needs of a micro-economy that is peripherally situated in a single continental market." jdebono@mediatoday.com.mt The articles form part of a content series called Ewropej. This is a multi-newsroom initiative part-funded by the European Parliament to bring the work of the EP closer to the citizens of Malta and keep them informed about matters that affect their daily lives. These articles reflect only the authors' views. The European Parliament is not responsible for any use that may be made of the information these articles contain. Not all socialists are the same: Robert Abela, first from right, stands with his counterparts from socialist parties. Malta has differing views about taxation and fiscal sovereignity