Issue link: https://maltatoday.uberflip.com/i/1509516
8 OPINION 12.10.2023 With an election in sight, voters are being charmed George Mangion George Mangion is a senior partner at PKF, an audit and consultancy firm, and has over 25 years' experience in accounting, taxation, financial and consultancy services. His efforts have made PKF instrumental in establishing many companies in Malta and established PKF as a leading professional financial service provider on the Island T he omens were good for the Robert Abela administration carrying the flag winning over an electoral ma- jority of 39,400 votes. e massive landslide was widely predicted by Vincent Marmara, the chief Labour party pollster and many rejoiced thinking the island would go on to sail along rivers of milk and honey prom- ised by the red torch carrying brigade. Yet, the honeymoon was soon over, and the lip- stick has long since dried on the blushing bride. Explaining the decision to take Malta off the Grey List, a spokesman for FATF said the island had doubled the resources of its business registry and conducted a thorough risk assessment. Almost a year after the Grey List was lifted, MBR an- nounced a more comprehensive software for users - although certain companies like Air Malta and Electrogas, as well as political parties, are years behind in filing accounts. Buoyed by the Fitch latest rating of A1-stable, prime minister Abela wel- comed the partial privatisation of Air Malta which hitherto was refused per- mission by the Commission for a govern- ment bail out. In this context, Ryanair owner brushed off suggestions that MTA subsidies gave his airlines an unfair advantage, call- ing the amount of support "very small", whereas others like Louis Farrugia (for- mer Air Malta chairperson) said he be- lieved the partial privatisation would en- sure the company was run commercially, adding it was what he and his colleagues had wanted to do in 2013. e show must go on and party apol- ogists want us to thank the Heavens for little mercies. But reality grinds on. When addressing the MCESD, finance minister Clyde Caruana cautioned mem- bers to tighten their belts and prepare for a bumpy ride. More grim news followed. Caruana said that Malta must be "pre- pared for what's to come" as he recalled the austerity climate pertaining as econ- omists measure the sluggishness of Euro- zone markets. He was prophetic about the stigma of inflation. He blamed its occurrence on two factors: higher oil prices (expected to reach $100 per barrel after the budget date), the Russian-Ukrainian war and af- ter effects of our high debt servicing costs (around €520,000 daily). Another head- ache is the shortage of skilled workforce which has been camouflaged by the im- portation of thousands of Nepalese un- skilled workers headed by powerful mi- gration agents. A scandal broke out showing agents were charging double minimum wage rates to government companies while poor workers had to live on minimum wage and after expenses try to send money back home. In June, the Times of Malta reported how foreign workers are paying up to €250 a month each to share a single apartment in Sliema with around 40 other people in cramped and unsani- tary conditions. As a case in point, tenants in the George Borg Olivier Street residence are sleeping up to nine in a room, share three bath- rooms and wash and dry their clothes on a single outside balcony. e increase in the number of TCNs implies that shar- ing arrangements are also changing as co-sharing has always been common with the foreign workers, anecdotal evidence indicates that overcrowding is more prev- alent with TCNs, especially those from African and South Asian ethnicities. e Housing Authority issued a report on the housing problem and some of its conclusions implicate that part of the problem can be due to discrimination, which results in lower access to housing and segregation. e report concluded that such gaps should be addressed and that the Housing Authority, along with the Ministry are discussing ways to up- date the regulations to ensure that the laws reflect the evolving market needs and realities. e Housing Authority has introduced several schemes intended to provide rent- al assistance to low-income households, assist in homeownership or to support their purchasing power also give us a glimpse into characteristics of categories that are more prone to face housing af- fordability difficulties. Naturally the advent of a vast cohort of low income TNC's has acerbated issues. It is calculated about 78,000 TNC's drive scooters to deliver fast food, man the 450 buses, clean streets, toil in construction sites and serve food in most hotels and busy restaurants. But hold your horses as Abela calmed the party faithful saying "this is why it is so important to have a government that knows what it is doing, that has the experience, and the proven track record where it counts". Clyde Caruana was less sanguine. He told MCESD members that government could not be expected to control the price of everything. He uttered this warn- ing to the awe-stricken congregation at MCESD. In our case, it seems that the wicked lady of austerity is knocking at our doors. Some may label the tantalizing experience as if we woke up from a psychedelic dream. Going down the rabbit hole is a metaphor for a journey into the unknown, as Alice is now invited to comment how the tiny nation is suddenly facing rising inflation, 7% increase in essential items like grain, wheat, cooking oil, and a lot of imported products. Domestically, energy prices are cur- rently under control but how long can Castille maintain the artificial one-time subsidies. ese cannot be maintained forever, as was the case with the lavish issue of the free €100 gift vouchers, the €2 billion worth of financial aid to hotels, restaurants, English language school ser- vices, among many others via furlough schemes. Not to forget bank interest is reaching a high rate for ailing companies. Another worry is the fragility of the fi- nancial services sector. e onslaught of new legislation aka transfer pricing, the banning of shell companies, imposing of a European common 15% corporate tax (this applies to 660 local companies em- ploying 20,000 top earners), DAC 6, 7 & 8) and exit taxes have all turned the tables against us as a preferred financial domi- cile. So far, Malta boasts of a long tradition of business support services especially auditing and legal services, enhanced tax competitiveness and the availability of skilled and English-speaking workforce. MCESD, MIA, IFSP, FIAU, MFSA, Fi- nanceMalta and banks need to unite and collectively promote the fledgling finan- cial services sector.