Lawyer decries 'state-sponsored usury' in tax fines

“State-sponsored usury” is how a lawyer has described the cumulative penalties, for failing to pay tax and social security contributions demanded from two of three co-directors of a defunct company, in court.

Brothers Philip and Raymond had been found guilty of non-compliance with tax laws, together with their brother Carmelo, as directors of Kidsline Ltd. The company had gone into liquidation after a year of operation, leaving income tax, SSC and VAT unpaid.

Inexplicably, however, the brothers had all been prosecuted separately. Whilst one brother had been spared a daily fine, Philip and Raymond Cutajar were not – in spite of the cases being heard by the same magistrate.The Cutajar brothers filed an appeal from this harsher sentence.

“We would have had no way of knowing what was decided in the case involving the third brother, had not a copy of the judgment made its way into my hands,” said lawyer Stefano Filletti. “With respect we cannot explain this difference in the sentences,” the lawyer told judge Giovanni Grixti. “If in Carmelo Cutajar’s case the court opted not to apply a daily fine due to clear legal considerations, it should have used the same measure with his other brothers, given that the legal considerations in their case were identical. For that matter, the company, facts and charges were identical in all three cases. Punishment too therefore had to be at least similar," said the lawyer.

Filletti told the court that the amounts his clients have been ordered to pay are so great that this fact, coupled with the fact that they are not entitled to a pension, had led one brother - aged 71 and suffering from severe mobility issues - to have to work every day as a refuse collector.

The brothers were not opposing the demand that they pay the tax with penalties, but with respect to one brother the accumulation of tax, penalties, interest, a court imposed fine and a second court imposed daily fine imposed of €4 per day, was not leaving the man with much after being deducted from his meagre €400 monthly salary, the court was told. “The punishment is completely disproportionate,” argued Filletti, adding that it was “inviting him to go to prison as he cannot pay. He cannot pay this amount in his lifetime, even were he to sell all his belongings and property.”

There was no reason for the court to not treat this case as that of their brother, added the lawyer. “When I see the same police inspector in all the cases, it is reasonable to say that the prosecution was aware of this situation. If the prosecution’s interest is justice not condemnation, it should have addressed this anomaly, not insisted on form over substance.”

The court will issue a decree on the matter in December.