Issue link: https://maltatoday.uberflip.com/i/741600
maltatoday, SUNDAY, 23 OCTOBER 2016 15 in Malta has increased exponen- tially... in part fuelled by a declared government objective to attract the world's elite to relocate to Malta through generous tax incen- tives. These people can afford to pay astronomical rents, and the unregulated market adjusts itself accordingly. Doesn't this virtually guarantee that prices will skyrock- et further? "I think there will be some form of saturation point. This has al- ready happened in the sales (not rental) market. Asking prices kept going up, until they reached a point where properties weren't selling any more. I think it will come to that in the rental market, too. We have to be careful not to lose sight of the bigger picture, however. It is good and desirable that foreign tenants are choosing Malta as a place to live, and are ready to pay higher rent than we are used to. But the benefits of this situation must not be to the detri- ment of people who need a place to live. This is not a luxury, but a necessity..." All the same, we are no closer to a workable solution. If the PN (and Labour, for that matter) has already ruled out price control, the only option that remains is to subsidise rental agreements. This is turn simply means that the gov- ernment – i.e., the taxpayer – ab- sorbs the rising cost itself, with- out exerting any direct influence over it. Is it fair on the taxpayer to continue subsidising the profits of landlords, so that political par- ties can avoid taking unpopular decisions? And isn't this also the standard answer of any govern- ment – PN or PL – to any social problem of any kind? Just pass the bill onto the taxpayer? "I don't think it's a case of not wanting to be unpopular with landlords. I still think it's ben- eficial for Malta to have a thriving private rental market... there are economic benefits for the entire country. I am aware that rent con- trol and price stabilisation mecha- nisms do exist in other countries; but just because something works elsewhere, doesn't mean that it will work here. I think we need to find a solution that is tailor-made for our needs. The government's initiative to double the rental sub- sidies is a step which I think, in a way, places us in the appropriate overall direction; but we need to discuss the issue in greater detail. I'm pretty sure we can come up with another formula that is ap- propriate for Malta." But the government's refusal to intervene in the rental market is not the only example. Another is the issue of a tax on vacant proper- ties. This would not only encour- age property owners to recoup costs by putting their properties up for sale or rent... it would also address the issue of dilapidated properties in urban areas. Yet both Nationalist and Labour govern- ments have always resisted this proposal. "I definitely agree with the idea of a tax on vacant properties. But again, there are alternatives. There is already an incentive, in the sense that if you buy a property in an ur- ban conservation zone, with an ob- ligation to restore it, you only pay 2% tax instead of 5%. The take-up admittedly was not great, but the scheme can be improved." Fair enough, but in general, Mal- ta's entire approach to taxation is to be very generous with the very wealthy, while digging into public money in order to make up for the social short-fall. So much so, that the European Commission is now pressuring Malta to bring its tax regime in line with the European norm, on the ground that by un- dercutting other European coun- tries, we are creating a non-level playing field. The I-gaming industry we men- tioned earlier, for instance, is a classic case in point. It posts in- conceivable profits... yet it is taxed less here than elsewhere in Europe, which explains why so many firms relocate to Malta. Isn't all this that unfair on the low and middle-in- come taxpayer? Why should these sectors be taxed to the hilt, only for their tax-money to be spent on social issues that could just as eas- ily be financed by taxing the super- wealthy? "It is part of the price we must pay to remain competitive with other countries. Why do people invest in Malta? If it weren't for tax-incentives, would they choose Malta in the first place? To answer your question, however, I'm not saying it's 'fair'. But we have to be realistic. This is why it becomes important to distribute the wealth created in a just way. In this re- gard, I think there hasn't been this fair distribution. That is why the disparity in wealth has become so much more visible over the past three years. That is also why we described the budget as one 'with- out vision'. There is no long-term vision for the country. Interview Echoing sentiment among various social partners, the Nationalist Party has criticised Budget 2017 as one which 'does not do enough to distribute wealth'. Is this a classic case of political opportunism? PN president PAULA MIFSUD BONNICI argues otherwise vision. But whose vision? PHOTOGRAPHY BY CHRIS MANGION