Bannister, the Malta files and tax avoidance

It cannot be denied that in the wider sense of equal benefits for all businesses in Europe, this tax regime is offering companies and individuals the possibility to avoid millions in taxes in their home country

23 May 2017, 8:05am
Cartoon by Mikiel Galea
Cartoon by Mikiel Galea
There is a code of behavior in politics that is traditionally respected but yesterday it definitely was not. The leader of the opposition Simon Busuttil’s assertion to the media about his decision to do away with public officers or appointed officials is not welcome. It is also doing him no good – what he will do if elected as Prime Minister is up to him but only after he is elected. One does not say who will be decapitated, at least not before being anointed King. Why cast shadows unnecessarily on individuals before being elected. Yesterday’s statement that he would not retain MFSA chairman Joe Bannister was unnecessary. This is not to defend Bannister but other prime ministers have retained Bannister in office. Were they all wrong, and Busuttil only is right? Busuttil has not shown much maturity in this election campaign. Electors are being asked to vote for Malta, and in this slogan Malta means Busuttil, which does not say much for Malta. So far at least.

Dr Busuttil should first of all ask why Joe Bannister has been in the job for such a long time.  Surely he does not head a declining financial services sector – it is rather the opposite.

Bannister has through his vast network – probably questionable at times – managed to placate the numerous interests in the financial sector, allowing the sector to grow amid accusations over the years of a financial services authority that at times looked the other way.

But there are various practitioners in the field who will recognize the assets of Bannister.

Calls to have Bannister removed have also come in the past from Evarist Bartolo, the PL Education minister, who has been an ardent critic of Bannister, egged on undoubtedly by those who disagree with Bannister’s style.  But Prime Minister Joseph Muscat has withstood criticism from within and out of his party and looked at the bigger picture. In Bannister he saw continuity, as asset that is essential in this delicate field.

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There is no beating about the bush, MaltaToday, together with several media houses across Europe, launched the Maltafiles, an extensive database of over 50,000 companies registered in Malta.  

The initiative underscores the tax advantages faced by these companies and individuals who seek the Maltese tax regime and avoid paying full taxes in their home country. The whole operation is highly unethical and this is something that surely does not interest the service providers and audit firms in Malta in any way.  On the other hand it does interest us.

Simon Busuttil may wish to link this to the Panama affair, but this is simple coincidence which works wonders with timing. The Maltese tax imputation system is being queried in a wider discussion about social justice and an equal playing field in Europe. A topic which politically (not the Maltese way) charged journalists love to confront.

It is true the financial services contribute to our economy in no small way, but this does not mean that we cannot reveal what is happening behind the scenes.  

That our economy is built over a local mutation of an unjust tax system that awards great tax avoidance benefits to foreign companies and individuals but not to local companies is a fact.  That this sector is essential to our economy is noted and appreciated.

But it cannot be denied that in the wider sense of equal benefits for all businesses in Europe, this tax regime is offering companies and individuals the possibility to avoid millions in taxes in their home country.

Ethics is our concern, political mileage is not.