Of bricks, tax evasion and tax avoidance | Frank Camilleri

Frank Camilleri is a company director

Finance Minister Clyde Caruana warned tax evaders during a speech in parliament that the government would come down on them “like a tonne of bricks”.

Unfortunately, in most cases, the proverbial tonne of bricks is thrown towards the wrong people—the many registered corporate organisations most of whom pay their dues as per legal obligations.

Just to clarify for the uninitiated, there is tax evasion and tax avoidance. Tax avoidance is when efforts are made to minimise one’s tax liabilities by legitimate means, in conformity with the interest of the stakeholders. There is absolutely no problem, legal or otherwise, with tax avoidance.

Tax evasion is when efforts are made to illegally try and reduce or avoid one’s tax liabilities through deceitful means. This eventually leads to money laundering.

So, the finance minister has to be careful where he aims his bricks. Most often, the brunt of government probes in this field centre around corporate bodies that at face value are always assumed to be the culprits. It shouldn’t be so.

If I were minister, I would start by lobbing a couple of bricks towards Cabinet members who have so far failed to submit their asset declaration forms in parliament.

Why the prime minister refuses to table the asset declaration forms of his ministers in parliament is anybody’s guess.

More bricks could be reserved for those involved in the gas power station deal, the hospitals privatisation contract, the Montenegro windfarm project—all of which involved millions of euros. One can imagine how much tax revenue would result if investigations were ever to take place seriously. But of course, these investigations will never take place since the finance minister is subject to political anchorage. He doesn’t have the last word.

There are also commercial activities that take place by unregistered individuals; or established companies offering their products and services outside the legal economic framework.

The black economy in Malta is so rampant and brazen that the finance minister would need truckloads of bricks if this sector is tackled in a serious manner.

Starting with the Maltese side of the problem, there is a large work force plying its trade outside their normal fulltime job working hours, offering services on a ‘cash only, no receipt’ basis. Many Maltese have come to proclaim themselves as plumbers, electricians, painters, plasters, decorators… all charging exorbitant prices and taking advantage of the high demand. All are being paid in cash.

And what about Maltese doctors and medical consultants? A friend of mine paid €300 for a 10-minute consultation at 10pm. And no credit cards were accepted. Just imagine the undeclared revenue this consultant raised at €300 per client and with six other patients still waiting in the corridor at 10pm.

And what about the numerous immigrants or imported foreign workers, who form the backbone of the economy?

There are many Syrians, Libyans, Iraqis and a few other nationalities that advertise their private work in the fields of plumbing, plastering, painting and decoration working on a cash-only basis.

So, back to the bricks—the finance minister would need truckloads to tackle the black economy alone.

Clyde Caruana needs to get out of his office and mix with ordinary people. Reality will hit him hard—like a tonne of bricks!

If he really means what he says, Caruana must be prepared to introduce strong and effective controls, free from any political anchorage and willing to enforce the rules on these culprits at all cost. By doing so he will be able to leave the bricks to the construction industry.