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local
news
Income benchmarking raises selfish
eyebrows
By David
Lindsay
A survey organised by this newspaper's sister publication, The Business
Times, relates to the income tax benchmarking exercise being carried
out by the Tax Compliance Unit. It has set alarms ringing throughout
Malta's professional class of workers – who notoriously under-declare
on the income tax returns.
However, the survey (see below) had used only the most modest of
estimated earnings and what will undoubtedly surface from the actual
exercise is expected to send shock waves through Malta's professional
community through its unravelling of the oceanic discrepancy between
declared and real income.
From the investigations carried out, it emerges that the discrepancy
between declared and undeclared income can vary as much as an awe-inspiring
300 per cent, while, even more surprising, the total tax sum evaded
would normally be equivalent to the entire sum declared to the Inland
Revenue Department.
The survey carried out took individual professions and made calculations
based on their relative income and has compared them with their
declared income.
For example, the survey found that medical consultants, on average,
declare a mere 23% of their annual income, lawyers 28% plasterers
and painters 21%, electricians 19%, and hair dressers 24%.
Meanwhile, this week Finance Minister John Dalli, while expressing
his hope that the exercise would be completed by September, stated
that he will be meeting with organisations representing the first
six of the estimated 50 sectors targeted by the Unit, sectors, however,
that have yet to be announced.
The benchmarking exercise is expected to encourage the professional
classes to present more realistic revenues in the future. However,
the drawback is that, while tax revenue accrued will go a long way
to cutting down on Malta's national deficit, the same professionals
may accordingly react by raising the price of goods and services
they provide – a move that will undoubtedly lead to higher
consumer prices.
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