Issue link: https://maltatoday.uberflip.com/i/682623
20 maltatoday, SUNDAY, 22 MAY 2016 Opinion D uring the last two to three months, politics in Malta has taken a serious downward trend, a "continuation of war" by other means. Rather than putting our heads together for the benefit of the country, it seems that we are more intent to play to the crowds, especially on Parliament television. We have resorted to shouting, creating as much havoc as possible to try and impress audiences. In the process, we have forgotten the policies, the reform and governance in general and as politicians, we are generating a general dislike towards politics and politicians in general. Winston Churchill has been quoted saying that "In war, you can only be killed once, but in politics, many times". In recent debates and speeches we have gone from criticism to overkill. Rather than provide the people with an opportunity to participate in a civil discussion, we are trying hard to distance ourselves from the reality of politics in favour of partisan politics. If we lose all sight of reason in our discussion we are also losing the respect of the people. During my parliamentary career, I have witnessed the major political parties shift from one end to another. Our social and economic policies are pretty similar, but the way to go about it and how we make it happen is different. But now we risk creating a new divide, between governance and extremism, which could lead to a new force in our political field – that of anti-politics. "The mainstream parties are finished! They won't survive for long," announced Beppe Grillo, in typical style, on his Cinque Stelle online television channel some time ago. The Movement bearing the same name of his TV channel is a clear example of what could lead to the decline of formal political parties. The former Italian comedian resorted to a fascinating and powerful mix of anti-establishment rhetoric, new technology and old-fashioned rallies and local action. "Head on the internet, and feet on the ground " was one of Grillo's major slogans. Supporters of the Cinque Stelle Movement are neither right nor left. They are all, however, angry about the state of democracy in Italy and Europe, and now do we risk having something similar in our islands, even though perhaps not in the short term? Shouting, name-calling and mud- slinging are not the ingredients for political maturity. Politicians are elected to work for the people and not to create an anti-establishment movement that can only serve to undermine society by simply denouncing the world as it is, without having the culture and energy to make the world, if not a better place, at least less terrible. Evarist Bartolo is Minister of Education and Employment The politics of anti-politics Evarist Bartolo Benefiting from tax planning Swissleaks in 2015 was a journalistic investigation of a giant tax evasion scheme allegedly operated by HSBC via its Swiss subsidiary, which received worldwide media attention. Similarly, a year later, the Panama Papers scandal took centre stage again and invigorated the resentment of citizens towards the proverbial 1%. The International Consortium of Investi- gative Journalists (ICIJ) revealed the links of the wealthy and even elected officials, to offshore accounts, trusts and shell com- panies in tax havens such as Panama and the British Virgin Islands (BVI). All this financial trickery, facilitated by Mossack Fonseca and other intermediaries, was set up so that those who could afford (and were supposed) to pay most taxes, paid the least. Make no mistake, however, tax avoidance is legal; you would not expect otherwise if the same law-makers are mak- ing use of this global system. What this ultimately exposed is capital- ism's Achilles heel. This economic system is based on the belief that in a free econ- omy with private ownership of resources, each individual will maximise his own profit. In turn this will magically result in the best possible allocation of resources and therefore the highest economic growth and technological advancement. This has been spectacularly proven true, especially from the industrial era onwards, where humankind achieved huge techno- logical progress in very little time com- pared to previous times. However, capital- ism relies on trickle-down economics as well. This theory has it that in the face of social inequality, and the inevitability that economic growth will benefit the rich more, the gains should trickle down to the lower classes as well. Such benefits include higher employ- ment and wages and higher tax collection to be redistributed in the form of better education, healthcare and social benefits. By now you may get where I am getting at: if there is a global system that facilitates tax avoidance by those that should be pay- ing most, it is siphoning off funds which should be bolstering the government budget. This effectively puts a spoke in the wheels of the capitalism machine and impedes it from achieving the best results. It reinforces the catchphrase-critique of capitalism: the rich get richer and the poor get poorer. What is most worrying is that now, after two massive data dumps, and when every- one seems concerned about this worldwide racket, it is still quite impossible to fix it. Tax havens such as Panama are fully legitimate sovereign states with constitu- tional democracies. Therefore any external entity will find it politically impossible to interfere with their internal tax regimes. Not even the nosey EU in all its institu- tional capacity can impose national fiscal policies on its member states (yet), let alone meddle with laws of some far away country. Blocking cross-border money f lows would be very damaging economi- cally, unfair on legitimate businesses and difficult to implement. No matter what law is created by humans, it can always be outsmarted by other humans. Therefore, should this be listed as another necessary evil of our capitalist society? One must also be aware that Panama is not alone in this, and is indeed the tip of the iceberg. Our own country is host to numerous foreign shell companies, shift- ing their profits here to enjoy rock-bottom effective tax rates of 5%. Apart from these mailbox companies, there are also full-blown businesses, such as the gaming industry, banks and other financial institutions. These companies on the other hand employ a huge number of skilled people and pay generously too. In my opinion, together with the unrelenting tourism growth rates, the intensification of the financial services sector has been the powerhouse behind Malta's recent economic boom. Consequently, we Maltese, who have enjoyed higher prosperity from this tax avoidance business, should not be so condescending towards Panama-like countries. A quick look at a list of tax havens on Wikipedia shows our country's name along with other advanced European economies such as the Netherlands, Lux- embourg, Ireland and Switzerland. What do these countries have in com- mon? They are small states. In the absence of any workable solu- tion in politically combating this highly complicated network of tax avoidance, my (highly) optimistic conclusion is the following. While this is bad news for large countries which are losing billions in tax revenue, small countries are feeding on the tax-scraps of wealthy people and big business which in proportion may be very significant to their central budgets. Economies of scale in tax collection and spending, achievable only with large popu- lations, are not available to small states, therefore on a global scale, shouldn't this even the playing field? Carlo Vassallo Birkirkara Politicians are elected to work for the people and not to create an anti-establishment movement that can only serve to undermine society by simply denouncing the world as it is, without having the culture and energy to make the world, if not a better place, at least less terrible Beppe Grillo