And they boast of a surplus

Our balance sheet allows the Maltese economy to borrow up to €5 billion, even with the blessing of the European Commission in this dire situation; and yet, there is a general reluctance to do this

Permanent Secretary Frank Fabri and Education Minister Owen Bonnici
Permanent Secretary Frank Fabri and Education Minister Owen Bonnici

If we have to go by the numbers of COVID-19 infected individuals in Malta and Gozo, the measures taken have been successful.

I pray I am not proven wrong. I am sure that if health minister Chris Fearne’s insistence in Cabinet that the government close down flights to certain airports in Italy was taken on board by earlier in March, we would be in a far better situation.

Unfortunately, the ranting of the usual lobbies who believe they have some privilege and a supreme right to dictate what comes first does impress on government.

If it were not for the geographical advantage of being an island, we would be suffering like any other country on mainland Europe.

And if does hit us hard and nasty, we can at least hope that our robust health service, better than some of our counterparts in Europe, will prevail.

We cannot really brag about it, but anyone who has had the misfortune of using Italian hospital services will come to appreciate why Italy has been decimated by this virus – in contrast to Germany, which retains a lower mortality rate than others, a direct result of the high health standards and healthcare.

But back home, there are two considerations which cannot be ignored.

Let’s start with the boastful declaration from the former Muscat administration of having achieved a surplus and a fund of hundreds of millions from golden passports. I think it is turning out to be one big joke.

I read balance sheets, yet it appears the government’s balance sheet is turning out into a finely tuned creative accounting exercise that could well be a mirage.

For now it is clear that the government’s mindset is that it should not borrow money at all costs. I see it as some Mintoffian principle, an ethos held dear by some economists and also Edward Scicluna.

This not only dangerous but suicidal. Our balance sheet allows the Maltese economy to borrow up to €5 billion, even with the blessing of the European Commission in this dire situation. And yet, there is a general reluctance to do this.

Maybe it’s because Malta’s finances are not what they have been portrayed to be. Figures in the public domain show that hundreds of millions are owed in tax, VAT and national insurance. That is money that has not been collected by the State. Historically, that figure stands at €1.2 billion: of this figure, €914 million is deemed to be “non collectable”, leaving €292 million in unpaid tax and national insurance still floating out there.

But interestingly, of this €292 million, €51 million is owing since 2018, €41 million since 2017, and €72 million since 2014… 56% of unpaid dues all incurred in the last six years. That’s excluding VAT, of which well over €2.3 billion has never and will never be collected.

The usual culprits among those who have not yet paid the employees social security are, I imagine, getting on with their lives, using money they should have used to pay dues to buy property, grow their personal wealth, purchase expensive boats and cars…

The question is: why have these monies not been collected? This is not to say that the tax departments have not done their job. Quite the contrary. The powers that be ensure they look the other way.

Your average Joe runs a small business, perhaps they are self-employed, and they get to face penalties, fines and in some cases imprisonment. The big boys on the other hand, are allowed to get away with murder.

These defaulters, who in another country would be out of business or better still facing prosecution, not only get on with their business but they also rob the State of much needed liquidity. To add insult to injury, some of them have been slotted neatly into the government’s Annex 1 for wage relief, which means they will get €800 for each of their employees.

It is not just political incompetence. This is the corrupt thinking of governments who enjoy having different rules of engagement for a certain privileged class, and for common mortals. It is this reason that finance minister Edward Scicluna can declare hand on heart that he has no money to spend.

When we do get at the heart of the Maltese surplus, we will realise that our economy is a tiger on paper only. It will beggar belief, when the fancy words of achievement about the Maltese economy will no longer mean anything.

The worst part is that those not in Annex 1, approximately 104,000 workers in the private sector, have now been rendered second-class citizens. The companies representing them will receive €160 for every employee in a month. Wonderful…

It is amply clear that we have a limited understanding of how the economy works but worse still we are willing to subjugate 104,000 citizens, who represent 25% of the population, to economic deprivation. This category, which most people have not yet realised will not be receiving the €800 per month per employee subsidy, includes amongst others private and independent schools.

Whatever the case, we are now living cheek-by-jowl with people whose lives will be buttressed by a public sector salary or an €800 wage subsidy, while others are left to fend for themselves with lower subsidies if any. This short-sighted strategy will end up being costly in the long run.

The second problem is the fight against COVID-19.

Once again, the effort to fight this pandemic cannot be selective. It is not on that certain industries continue to function and others do not. The usual sectors are incredibly successful in getting concessions from government and one does not need to look further than the construction sites to understand who is getting to enjoy the limited blessings on offer right now.

If people are to make sacrifices to stop the spread of the virus, we cannot have exceptions to the rule. The earlier we get out of this war, the better for all of us.

Which explains why the call for 65-year-olds to stay at home not to go out, and then to suddenly change tune with a plethora of exceptions, is indicative of the kind of disjointed political response.

The fact is, when it comes to saving a country from a pandemic, you need to listen to the physician not the politician.

And when it comes to the economy, a politician needs to listen to what he is being told, decide in the interest of the community; not of the micro-interests of a small segment traditionally advocated by individuals with no interest in the bigger picture but driven by a desire to take advantage over one group or another.

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