Issue link: https://maltatoday.uberflip.com/i/1508764
maltatoday | SUNDAY • 1 OCTOBER 2023 9 INTERVIEW economic vision still remains the same old 'zewg liri Maltin', that I was paid when I was 18 years old? And do you expect Maltese workers to say: "That's the job I want to go for?" No, it's not going to work that way. But if you ask me, the biggest harm done in the last 10 years, was that we depleted the private sector of Maltese employees. Take factories, for example. Un- til recently, their HR people used to call every day, asking: "What are we going to do? We don't have any workers left. Everybody's re- signing, left right and centre..." What happened? Those work- ers resigned from the private sec- tor, because they were OFFERED [heavy emphasis] a job by gov- ernment. There were even cases where the ministers themselves hounded employees to leave their job, and come work in the public sector instead. This is especially true in Gozo. If you go to Xewkija, you will find factories with not a single local employee... and until recently, they had no workers at all! So... what are we trying to do, here? Because I say that this was not a 'coincidence'. This was a plan... I take it that this 'plan' involves politicians using those public sector jobs to 'buy votes for themselves'... right? Yes. There has been a concerted effort, on the part of politicians, to entice workers with promis- es of 'cushy jobs' – when those workers were already gainfully employed with the private sector. And it's not just coming from the Labour government, today. It used to happen under the Na- tionalists, too. Because the prob- lem is not with one party, or the other: it's with the political sys- tem, as a whole. Meanwhile, the outcome is that: on one hand, we have all these Maltese graduates, fresh out of university, who are seeking em- ployment abroad – because the local salaries and conditions are so poor – and on the other, you have Maltese workers with low- er levels of education, who are seeking only to land themselves a comfortable job, in the public sector. On top of that, you have politi- cians who encourage that men- tality among the population. In- stead of working on a long-term plan for the national economy... politicians simply look at what individual people out there might need, or want; and just give it to them, regardless of whether 'mer- itocracy' comes into the picture, or not. This is why I compare this na- tion to a family: where the 'par- ents' (government/politicians) are pampering their 'children' (people/voters) beyond all rea- sonable limits. But it can't go on forever. Clearly, the time has come to change that mentality; but are our politicians prepared to take that step? This brings us back to the Budget: which is where gov- ernments usually outline their economic strategies, for the coming years. What sort of measures do you WANT to see... and, conversely, what do you realistically expect, from Budget 2024? To start with, one thing I would like to see in this Budget – though I very much doubt government will concede to it – is that the COLA reimbursements are no longer taxed, as they are today. This is an injustice: because you have to remember that COLA is actually a refund, at the end of the day. And you can't 'tax a refund'. To give you an example: if you were a UHM employee, and we asked you to conduct an inter- view in Gozo... you would take the ferry to Gozo; come back with the receipts; and then, we would refund your expenses. Now: that money would have been spent on services such as the ferry ride, etc. So 18% of it would already have gone to the government, in the form of VAT. How, then, can government tax the same sum of money, a second time? Yet this is exactly what govern- ment is doing, by imposing a tax on the E13 COLA increase. And it's not the only example. There is an element of double taxation, even when it comes to National Insurance. If you earn a salary of, say, E20,000: 10% of it goes to- wards NI contributions... leaving you with E18,000 in your pocket. But then, your Income Tax con- tributions are still calculated on the full E20,000: even if E2,000 of them have already been paid, as a tax. These are all injustices, that government continues to justify by saying things like: 'Listen, guys: don't forget that we are also sub- sidising your energy bills!', etc. The problem, however, is that the energy subsidies are being given out to everybody, equally – including both employers, and employees alike. But the CO- LA injustice is only affecting the workers... Speaking of energy subsidies: Clyde Caruana also hinted that these may have to be removed, in the near future; and he is under considerable pressure to do so, from the European Commission. But isn't this just another example of unsustain- able economic policies, driven by political interests? Isn't the Labour government just 'buy- ing our votes', by subsidising our energy bills? I don't see it as the same thing, to be honest. Actually, I think that – if (or when) government does stop the energy subsidies – neither families, nor places of work, will be in any position to withstand the impact. You have to remember that Malta 'tax-GDP ratio' current- ly stands at around 38%. We are not hovering somewhere around 15%, like some countries... but we're below the EU average of around 40%. If we were to remove the energy subsidies, however: our tax-GDP ratio would shoot up far beyond the 40% mark. And that would make Malta one of the most taxed countries in the world... if we choose to go there. It might not be a question of choice, though. Malta may be forced to go in that direction: if not by the EU, then by the sheer unsustainability of the expense involved... That's the point I was making: Malta doesn't have a lot of room to manoeuvre. But let's say we do want to go there, out of choice. The first thing we'd have to do, is see to it that people have the money to pay their taxes. It's pretty useless taxing people, when you know that they don't have the income to actually pay. First and foremost, then, we need to address productivity. Only when the productivity rate has increased, can we start talking about 'improving salaries'. And only then - when you have a bet- ter salary-structure in place – can you begin considering a strategy to eventually stop the energy sub- sidies. But before any of that can hap- pen, you have to ensure that the nation is ready to take the impact, when it comes. And as things stand today: nobody is ready to withstand that impact. Nobody... So when Minister Caruana said, yesterday, that: 'At some point, we will have to stop the subsi- dies'... the question is: when? And what strategy is he consid- ering, to prepare the country for the blow? This is why – in my opinion – it all comes back to the need for a clear economic vision. As things stand today, the two parties are still competing over different 'national strategies'. We cannot afford that any longer. We need to agree that we are in a situation – and with the challenges facing us today, I would even call it a 'crisis situation' - where we have to come together, and identify a common, national strategy: to be implemented, regardless of who wins or loses an election. It doesn't mean that there shouldn't be any political com- petition, between the two parties. They should still compete, over who is best suited to implement the necessary reforms. But on the reforms themselves, there has to be consensus. We cannot continue to have po- litical parties offering us an eco- nomic vision for only five years... and then, somebody comes along and changes everything around: so that we have to start all over again, from scratch. Now: some people out there will disagree with my position. They will say, 'Oh, but Malta has ex- isted for thousands of years... and somehow, we always managed to survive.' In today's geopolitical context, however: that's clearly not enough, anymore. To survive in the world today, we need a common vision of where we actually want to go. Otherwise, we will just carry on going round in circles, like we're doing today.