Friday, 3 November 2000

Yo`ve got Mail

The Malta Independent

You`ve got Mail

If you happen to be one of those who signed the GWU petition urging the government not to persist in taxing the middle class and depressing their standard of living, then you`ve got mail.

The Prime Minister has taken the trouble to reply directly to your appeal. Quite commendable! You made your case and you have` your reply. There are many instances where this administration can be accused of lax expenditure controls but this is not one of them. I say that once the petition was signed with name address ID number and all,` it was only prudent for the government to reply through its highest representative.

What is not commendable is the content of the reply. It contains untruths, half truths and twisted facts which would be scandalous in a political promotion letter let alone in an official communication by the Prime Minister.

The Prime Minister complains` that on return to power in 1998 his administration found a budget deficit of` Lm150 million. Wait a moment Mr Prime Minister. The election was held on` 5th September 1998. Official Government Finance Data published by Central Office of Statistics` for the period of January to August 1998 shows that the structural budget deficit ( i.e. excluding one-off privatisation revenues ) for the 8 months to August 1998 was Lm73 million.` How in the four months that the Prime Minister was in charge this was ballooned to Lm150 million is nothing short of playing with figures by shifting expenditure and revenue from one year to another.

Comparative figures for the first 8 months of 1999 shows that the deficit increased to Lm87 million and it is only this year that it reduced to Lm62 million but only after extracting from our pockets Lm68 million more than in 1998 by way of Income Tax, VAT, Customs & Excise` and Social Security contributions. Some cheek in criticising the 33 taxes introduced by Alfred Sant. In fiscal measures it is not the quantity but the quality that counts.` `Just 3 measures introduced by the current administration, i.e. national insurance contribution` double increase, flattening of middle income tax bands and VAT on petrol is worth 333 not just 33` of Alfred Sant`s taxes.

The Prime Minister seems to have swallowed the PN`s propaganda about the CET being at 21% rather than 15%. Again this is not even suitable in a party propaganda letter which is often very economic with the truth.` It being carried in an official letter signed by the Prime Minister devalues the esteem which the post should carry. The truth is that whilst VAT applies the 15% on the final consumer price., the CET mechanism, applied different percentages at different stages of the delivery chain but in a way that the amount taxed was generally equivalent to 15% of the final consumer price.` If anything the Labour` system taxed services at 5% rather than VAT`s 15%. And this is not to argue that CET is better than VAT but only to stress that` it is just not true that CET charged consumption at 21% rather than 15%.

As to the increase in employment the Prime Minister needs a brush with the concept of` economic lags. Decisions taken today will have a measurable economic effect after a time lag of several months often several years.` So if employment statistics under a Labour government make poor reading than this ought to be pinned on the last two years of the PN`s administration which terminated its duties in 1996. If the employment statistics now` look good then it is more likely to be Labour government`s merit rather the present administration`s. For the merit or otherwise of the latter we`ll have to see next year and we will have to eliminate artificial employment in government controlled bodies. It is shameful that rather than re-deploy and retrain existent idle resources the public sector continues to take in new employment paid out of hard earned tax money.

Only strong leadership can deliver us from the financial wreckage which in the coming years will continue to be papered over by privatisation revenues.` Instead we get silly propaganda letters which do not move us one millimetre towards finding real solutions.

Alfred Mifsud

No comments:

Post a Comment