OPINION: How True Is All This?

This Opinion column at TheIsland.Mt makes apologies to no-one for, exceptionally, again tackling the subject of a previous piece, viz taxation.  This is being done in the wake of a serious allegation, or implication, made in a recent personal published Talking Point piece by the Nationalist Party’s Member of Parliament, Dr. Jason Azzopardi. This is to the effect that the state in Malta is permitting the use of the state’s own income tax system as a coverup tool for money laundering by certain taxpayers.

If this is true, then this is serious stuff.  But, before we all get hot under the collar, let us all accept one simple reality. The taxpayer, who is in some sort or other of a financial fix, will always be thinking and working, day and night, to come up with some sort or other of subterfuges or stratagems to not only beat the tax collector and be one up on him, but to also, obviously, dig himself up from his financial hole. In this sense, tax evasion (or even avoidance, the terminology doesn’t really matter, even the IMF has implied this!) is only one tool which he uses to help him last and live on.  This is a game which is obviously played not only by the financially crippled taxpayer but also by his accountant/s, lawyers, architects, and God knows who else.

Given therefore this constant cat and mouse reality, it – i.e., the state – if it wants to be serious must accept that it does two things: be constantly smarter and equal to all sorts of such tricks, and tackle head on, with absolutely  never any kid gloves on, such malfeasances. There should be absolutely no room for any form of mollycoddling with such people.   

That’s for starters. The second is that the fiscal authorities should keep an eye also on various lateral elements, operations, or areas which, prima facie, might even suggest that they are of no real direct or paramount concern of the revenue departments.  Different bodies or persons or authorities working in silo fashion should end.  For example, how do certain business operators suddenly find themselves able to convince the financial markets to provide them with operating funds for their current day-to-day, or even capital investment, projects, e.g. through the issue of bonds on what is an absolutely financially ignorant populace?  This populace often suggests it is being taken in by the smooth marketing of sellers of such financial instruments. But the country could well, sooner or later, be in the soup with any first defaulting bond issuer, seeing that the banks have wisely seen certain realities a long, long time ago, and that financing avenue has been resorted to by several business operators.   

In some sense, this brings forward the other reality of this country: what has been here termed as silo operating.  If we have, for example, three revenue departments, plus a social security department, plus an FIAU, plus an MFSA, plus a police white crimes unit, plus whatever else, these should simply eschew any temptations towards “This/that is not part of my remit” approaches. 

If, for example, DrJason Azzopardi is now alleging that even the actual prompt payment of tax by certain business operators is tantamount to an exercise where under these same taxpayers are using funds obtained illegally, then doesn’t this place the Inland Revenue Department on a par level with the other various potentially involved parties (e.g. banks, lawyers, notaries, accountants, priests, etc.) as contemplated in AML/FT legislation? 

This is all working up to levels which are undoubtedly well within the sights of all those foreign bodies (IMF, FATF, Venice Commission, EU Commission) who inevitably have their eyes on Malta.  Whilst one sincerely hopes this assessment is wrong, if such developments keep coming up at the rate they have been over the past five years or so, then one seriously doesn’t see much hope for Malta being moved from the ignominious grey list any soon.