Issue link: https://maltatoday.uberflip.com/i/899902
maltatoday SUNDAY 12 NOVEMBER 2017 Opinion 22 T hey say nothing is certain in this world, except death and taxes. I'm not so sure about the second ones – as has been shown over the past days through the Paradise Papers. Over the past year, the local financial sector has been under attack on various fronts. But really and truly, compare what we offer to big business to what the Netherlands, Ireland, Luxembourg or the UK offer. In many cases, Malta is more transparent and upfront about what it does. Let's put things into context. The Paradise Papers leak showed that a major US company uses a limited partnership vehicle, established in the Netherlands in the 1830s, to pay ridiculous amounts of tax. Outside the US, their tax rate was 1.4%. Even in a relatively closed environment such as the US, companies use different states to do this. Delaware, a small state in the north-east, does the exact same thing by not having a state corporate income tax. Montana, Nevada and Wyoming are not too far off. Big Business The real issue here is not Malta. It is the global financial system. But a global financial system is also dependent on an array of things, including policymakers. We have seen what happened in Greece over the past two decades, with big business influencing policymaking in an unhealthy manner. We must make sure there are checks and balances in Europe to prevent overbearing influences from the business side. The United States has invented the art of lobbying, but there are strict laws and regulations in place to regulate that relationship. We must have these mechanisms in place, even for Europe. The EU must also have a common policy on actual tax havens, with zero beneficiary information and zero tax rates, outside its jurisdictions and the relationship of European commerce to them. There can't be a rule for the multinationals and a rule for the common man. But today, all this is legal and dandy. They are companies who produce our everyday products and they are legitimate. Plus, these strategies are on the increase as more and more companies are doing it. It will come a time when it has to stop, simply because it is no longer sustainable. Malta Our country managed to be a step ahead of the game thanks to a financial industry which was created by the Nationalist Party in government and supported by the Labour Party in opposition, over the years. This industry was created by making sure we are efficient, within EU law and competitive with other jurisdictions. Couple all this with quality practitioners on the field and we have a winning formula. Now the Nationalist Party, through its two leaders, jump on the bandwagon and paint Malta as Sodom and Gomorrah. They cry wolf at every corner, without knowing what they are on about. You can't be a hypocrite in the morning and an angel in Parliament in the evening. You can't make use of generous, well-planned and EU-approved business incentives in the iGaming, shipping and financial sectors to charge hefty fees in the morning, and talk about Malta being an illegitimate tax haven in the evening in Parliament. It doesn't work that way. If the Nationalist Party wants to destroy these sectors, they can put it in their electoral manifesto next time round, and then explain how exactly we are supposed to incentivise business to come to Malta. It takes more than sweet honey and sunshine. After that, they can explain where the inevitable budget cuts from a shrinking economy will take place. Will it be pensions? Perhaps health and education? There are things we can do better here. During a Q&A session with University students this week about a different topic, I explained that I would be the last person to introduce a particular set of policies allowing some heavy hand from the outside to crush the University of Malta. Their reply was that I might not, but I won't be Minister forever and one doesn't know the intentions of anyone who will follow me. They are completely right. And that is why checks and balances and review mechanisms are important. As a country we have a lot to improve, including the financial services and governance. We must work hard to defend our reputation. Having the financial watchdog in business with shady characters doesn't help. We must tighten up where needed. But, overall, a lot of this country was built on these sectors. Above all else, the political class needs to understand that this is a competition among countries, and our edge is irking others, who have financial capitals of their own to sustain. Malta is attracting business which usually goes their way, and we must work together to make sure that while the industries we have are transparent, reputable and efficient we continue building more sectors which provide jobs and create wealth in this country. And beyond mere business growth we must continue to nurture an ecosystem for sustainable economic and social development. Evarist Bartolo is minister for education and employment The political class needs to understand that this is a competition among countries, and our edge is irking others The EU must also have a common policy on actual tax havens, with zero beneficiary information and zero tax rates Two things certain… or one? Evarist Bartolo F irst off, I must admit that those 'Mafia State' T-shirts, on sale at the recent protests, are pretty cool. (My only criticism is that they would be much cooler if also available in black; but that's just me). The slogan itself sounds like the name of a Brian De Palma movie, or a novel by Roberto Saviano. It would even make an awesome Gangsta Rap album title: I can just picture Eminem or Doctor Dre going to town with a lyrical theme like that. Whether it is an accurate description of 21st century Malta is, however, a very different question. And not an easy one to answer, either. Let's start with the actual issue of Mafia presence. That Malta is a country in which organised crime exists – including, but not limited to, the Sicilian Mafia... yes, I guess we can all see that now. But I am unaware of the existence of any country in the world where criminal organisations do not operate at all. The words 'Mafia State', however, imply far more than just Mafia presence. They indicate either some of form of control of the State by said criminal organisation; or that the State itself is a 'mafia' in the looser sense of the word. If the former was the intended meaning... well, for much the same reason, it is hard to refute. Not just for Malta, but for almost any other country. Broadly speaking, the Mafia controls politicians – anywhere in the world - through bribery and threats of violence. But mostly, I would imagine, through bribery... given that the Mafia, if ranked as a legitimate global corporation, would probably be every bit as wealthy and influential as Bill Gates. In fact, if you are going to somehow enslave a State, it can only be through corruption. Brute criminal force is clearly not going to work. Are we to understand, then, that other countries in the world are somehow immune to the corruptive influence of organised crime? If so... what's their secret? What magic formula do they use to guarantee that their administrations are 100% Mafia-proof? Not a very successful one, I would say at a glance. Take Italy, for instance: the country that invented the 'Mafia' to begin with. Just yesterday, an Italian journalist was savagely assaulted while investigating a Mafia-related story, resulting in a nationwide outcry. Already some attempts have been made to compare this with Daphne Caruana Galizia's murder... both were journalists, both victims of violence, etc. There is, however, a rather crucial difference: one had his nose broken, and the other was blown to smithereens by a car- bomb. Not quite the same thing at all. No, the reason I mention it is that the story this Italian journalist was following involved alleged Mafia involvement in a regional election. Specifically, he was investigating claims that the Mafia had rigged the Ostia election to favour an extreme rightwing party. Even if this were a one-off, I'd say it would be unfair to dismiss Italy as a 'mafia state' on that basis alone. But of course, it's not a one-off. Time and space do not permit more in-depth examples: but seeing as so many people have already cited the assassinations of Giovanni Falcone and Paolo Borsellino, it is worth remembering that most of the resistance those two judges actually encountered in their anti-mafia investigations came from politicians, not directly from mafiosi. So if Malta is a 'Mafia state' by that definition... then what the heck is Italy? The second interpretation is even more insidious. Here we have to further distinguish between 'Mafia' as in 'Cosa Nostra'; 'Mafia' as in 'any old criminal organisation that uses the same methods'... and then, an additional distinction: any organisation at all, that operates through secret cabals and a ruthless system of 'outsiders' and 'insiders'. That last one is a bit tricky: a criminal organisation is, after all, not unlike a government in many respects. There is a target – money for the Mafia, power for the government – that both categories would stop at nothing to acquire. Though one is legitimate and the other isn't, the means to the end invariably overlaps. To consolidate their grip on power, governments resort to a hierarchical system of trusted appointments... in which everyone knows whose ring to kiss at whose wedding, all the way up the chain to the Padrino. On that score, who the hell can deny that Malta is a 'Mafia state'? The entire Godfather trilogy could have been filmed here. And it's been this way ever since I can remember, too. So for what it's worth, I'll stick to the first Raphael Vassallo