Issue link: https://maltatoday.uberflip.com/i/1499169
6 maltatoday | SUNDAY • 27 MARCH 2022 OPINION 2 maltatoday EXECUTIVE EDITOR KURT SANSONE ksansone@mediatoday.com.mt Letters to the Editor, MaltaToday, Vjal ir-Rihan, San Gwann SGN 9016 E-mail: dailynews@mediatoday.com.mt Letters must be concise, no pen names accepted, include full name and address maltatoday | SUNDAY • 14 MAY 2023 Rewarding the hard- working middleclass: a permanent tax cut Editorial MALTESE workers started receiving their tax refund cheques last week, with an accompanying letter claim- ing that this is government's way of 'rewarding hard work'. The refund was an electoral pledge made in 2017 and retained by the current administration. It is paid to all workers earning up to €60,000, with those on the lower rungs receiving more than those in the higher wage brackets. The intention was to provide 'tax relief' that ben- efitted mostly those on low incomes – indeed, re- cipients include even those who pay no taxes at all, because they fall below the taxable income threshold. The argument back then was that because of the progressive nature of income tax, a traditional ad- justment in brackets would mostly benefit those with higher incomes. The refund model, government ar- gued, was more socially just in the way the money is distributed. The individual cheque amounts have since been increased with the total outlay this year amounting to €26 million – not an insignificant expenditure. But with €26 million more in people's pockets, the refund is an injection of sorts in the economy. This leader will not rubbish the scheme; but there are three points that require reflection. The first considers the intention to reward 'hard work'. This rings true for salaried employees who have their tax deducted at source. These workers pay their tax dues with every paycheque of hard-earned money they receive from their employer. However, this cannot be said for everyone. Tax evasion remains rampant at every level: from self-em- ployed service providers who provide no fiscal re- ceipts; to restaurants that surreptitiously provide customers with non-fiscal receipts; from companies that declare losses every single year, despite having a healthy turnover; to employees who ask their bosses to pay part of their wage in cash, so as not to declare the full amount. Tax evasion is costing public coffers hundreds of millions in lost revenue every year – revenue that could be put to good use by the State. A concerted effort to curb tax evasion will ensure the State has enough resources to sustain public ser- vices, widen social programmes and invest in infra- structural projects. With several sectoral agreements in the public sector coming to an end, government is currently negotiating new collective agreements that will inevitably lead to a higher expenditure: especially in a context of rampant inflation. To finance generous wage increases, the govern- ment needs to source new funds; and a clampdown on tax evasion could provide those additional re- sources to sustain wage growth in key public services. The second point regards the judicious use of pub- lic funds. Splashing out on unnecessary consultancies, or even ones that have been invented to reward gov- ernment supporters, sends out the opposite message to the more frugal tone adopted by Finance Minister Clyde Caruana. Government has to lead by example. Curbing on consultancies, direct orders and unnecessary recruit- ment in ministries might not save the country hun- dreds of millions; but it would give the government a morally convincing argument to get tough on tax evasion. Additionally, Caruana must carry out periodic spending reviews of the different ministries to ensure that money which has been voted is used correctly and efficiently. If money allocated to individual minis- tries remains unused - or worse, is used irresponsibly - then Caruana should trim budgets. The third point concerns the need to give middle- class families a meaningful breather through a perma- nent tax cut. The reduction in utility bills in 2014, the introduction of free childcare services, the drop in the top rate of tax to 25% for those earning up to €60,000: all these measures served to give the hardworking middleclass a boost in disposable income. The positive impact of these three measures alone was immeasurable coming after years of austerity. However, the longevity of those measures has now come to an end. Disposable income is being eroded at a fast rate because of inflation. It is true that govern- ment's hefty expenditure on energy and fuel subsidies has cushioned the blow. These should be retained; although government should also start a gradual weaning off process, especially in fuels, to ensure the sustainability of public finances in the long term. But this leader believes the time has come for a more significant overture towards middle income earners – the backbone of this country's economic success – that rewards them with something more significant than a one-off cheque. The non-taxable portion should increase, while the current top rate of 25% for those earning less than €60,000 should drop to 15% for a substantial portion of middle income earners. The government could al- so introduce a new 20% rate to differentiate the mass of people that currently pay at 25%. This will inevitably create a shortfall in income for government but if introduced gradually and coupled with a concerted effort to curb tax evasion, much of the lost revenue can be recouped. But revenue can also be beefed up with higher excise taxes on fuel - an environmental measure to encourage people to use public transport which is fully subsidised. In brief: The middle class needs a fresh impetus that truly rewards its hard work. 14 May 2013 MP paid travel subsidy for board meetings she did not attend NATIONALIST MP Marthese Portelli attend- ed just one meeting out of 11 board meetings of national waste agency Wasteserv in 2012, but was still paid her annual €3,494 honorarium, environment minister Leo Brincat has told the House. Portelli was appointed to the board of direc- tors of Wasteserv in 2008, where she earned an annual honorarium as well as a travelling allow- ance of €48.53 for every board sitting she should have attended. But MaltaToday is informed that she was paid over €2,911 in travelling allowances by Was- teserv between 2008 and April 2013, despite having attended just one of her 11 board meet- ings in 2012 alone, and none of the two meet- ings in 2013. This newspaper is not informed as to her attendance record in the preceding years. Portelli, who is the president of the PN's ex- ecutive committee, was appointed to the board of Wasteserv by the then minister George Pul- licino. Her €48.53 allowance for every board meeting attended was justified as being paid to Gozitan residents only, as a travel subsidy. Portelli how- ever has her residential address in Birkirkara. But replying to a parliamentary question ta- bled by government MP Anthony Agius Decelis, Environment Minister Leo Brincat this evening said that both the honoraria and benefits en- joyed by Portelli had not been regulated by a contract, but according to appointees' guide- lines approved by the previous government. "According to Wasteserv, the travelling allow- ance was granted in addition to the honoraria she received," Brincat said, adding that he had now been informed that the benefit was simply a 'travelling allowance' - and not because Portel- li resided in Gozo. According to the information given to the minister, "it is therefore understood to have been issued by the then CEO on the basis of the additional work that was expected by the said director." Brincat added that at no point was this addi- tional work defined. 10 meetings. ... Quote of the Week "The question everybody should be asking is whether the decisions being handed down [by the courts] are reflecting the gravity of the injuries caused to the victim." Prime Minister Robert Abela on the outrage over court judgments concerning serious traffic accidents that are being perceived as lenient. 11 May, 2023. MaltaToday 10 years ago