Tuesday, 1 July 2014

Bites, bytes and bits

This article was published in The Malta Independent on Sunday - 29 06 2014

As the month of June cruises towards its end to mark the mid-point of this unfolding year, we have had a month of bites, bytes and bits.


The World Cup has delivered the surprising results of the group stages, with the elimination of favourites such as defending holders Spain and previous winners Italy, as well as the quick failure of other nations who were expected to perform much better such as Portugal, England, Russia and Croatia. The Europeans are finding it tough going in Brazil – not helped by some controversial refereeing that has clearly weighed against Bosnia Herzegovina and Italy.

It is incomprehensible that a footballer of the quality of Uruguay’s Luis Suarez has to revert to the physical biting of opponents at crucial times in a match to re-shape doomed fortunes. It is even more incomprehensible that he can do so with instant impunity, to the detriment of opponents. Biting an opponent during a match is not only a grave offence punishable by instant dismissal in football, but is also offensive to all sports in general. Not even in physical contact sports such as boxing and wrestling is biting tolerated.

It is also an offence easy to prove. It requires no goal-line technology. It needs just common sense by match officials when faced with irrefutable evidence – especially if corroborated by the historical record of the imputed offender. Italy probably did not deserve to go through from the group but they probably did not deserve to go through even in 1982 either – when they eventually won the World Cup in Spain – and in 1994 when they lost the final in the USA. Being eliminated by a bite on the ground bites into the moral of a nation for whom football is a way of life.

* * * *

Details were announced this week about the mechanics of the Investment Registration Scheme 2014 (IRS 14) which essentially is a revised version of several similar schemes operated by past PN administrations but at a higher fee (7.5 per cent compared to the former three to five per cent. Tax offenders who are quickly losing the non-disclosure protection of foreign jurisdictions are being offered a fairly easy way to regularise their past undisclosed (and consequently untaxed) earnings if these are still represented by assets that are eligible for registration under IRS 14. These assets do not include cash but do now include property held in Malta and loans to private companies.
Human nature being what it is could make tax-dodgers consider compliance with such schemes as a taxman’s bite into their wealth. In reality, it is the tax dodgers’ bite into the public coffers in that they are being given an opportunity to regularise income that should have been taxed at rates between 15 per cent and 35 per cent by paying simply 7.5 per cent, without any penalties or interest, and in the process also being forgiven for offences related to social benefit fraud resulting from such formerly undeclared assets.

Whilst one appreciates that this is a last chance to bring tax dodgers on board before international tax disclosure arrangements result in much more serious consequences, and also the economic benefits of such hidden capital being given an easy chance to become active within the regular economy, one also questions why tax dodgers should be given such favourable treatment compared to other forms of offenders against public funds.

Offenders under VAT legislation and those who defrauded Enemalta by permitting tampering to their meters have received much harsher treatment. Whilst in their case penalties have been reduced conditional on full admission and disclosure, they had to pay the full amount originally due plus reduced penalties. On the other hand, IRS 14 and similar such schemes under previous administrations offer tax dodgers a substantial discount to regularise their position and retain their non-disclosure cloak. Any tax offender who considers regularisation under IRS 14 as a taxman’s bite into their wealth is surely unfamiliar with the mechanics of tax amnesty schemes being given in other countries, especially the UK and Germany.


June 2014 was also the month when major technology companies such as Apple, Samsung, Google and Amazon revealed their product innovation plans to show how they are intending to keep consumers hooked by making their lifestyle dependant on such technology. Just as the smartphone has changed the mobile phone into a portable computer, giving instant access to information on the move, the next big thing will be how to make the smartphone the core source of not only external information but also of internal information and its management and control, ranging from our own health to appliances within our homes.

Putting so much information under one central technology control could be as convenient as it is scary, knowing that so much confidential information is controlled by third parties who, even if well-intentioned, could either exploit us commercially – as we become dependent on such technology – or themselves be exposed to criminal external hacking attacks that could gain illegal access to so much confidential details about us.

As technology extends its reach and dominates our lifestyle, regulatory control must also keep up to ensure that consumer protection remains effective. The EU is at the forefront of such regulatory up-dating, as was evident by the recent European Court of Justice ruling granting individuals ‘the right to be forgotten’.

When we leave home these days we have to ensure we carry three things: the smart phone, the watch and a wallet full of cash and all sorts of cards (credit, debit, parking, loyalty, etc.). Soon the smart phone will be all you need as it is linked to other wearable technology, whether it be Google glasses or i-watches. Self-driving cars will come later.


From the bytes to the bits. As the world marked the centenary of the event which triggered World War I, i.e. the assassination on 28 June 1914 of Archduke Franz Ferdinand of Austria and his wife Sophie, the EU basically marked the event by a divisive vote at the EU Council for the nomination of Jean Claude Juncker as President of the Commission. This nomination was strongly opposed by British Prime Minister David Cameron, who has spent so much political capital on it that it is difficult to see how he can defend British membership in the EU if he is re-elected and keeps his pledge to hold an in or out referendum.

The defeat of Cameron cannot be considered a victory for the 26 countries (only Hungary supported Britain’s objections) that supported Juncker’s nomination. The EU must inevitably re-visit its internal structures and Juncker is expertly positioned to lead such a project, which might pleasantly surprise Cameron.

Ultimately those who have agreed to share their currency have also to agree that this is only sustainable if they agree to share many other things, leading to the deepening of their political ties on federalist lines. Those who, like Britain, do not agree to share their currency can then be given a much looser arrangement outside the basic conditions of a single market.

Marking the centenary of the first World War – which was the main cause of the second World War (many consider both wars as a continuous one with a 20-year non-belligerence interlude) should help realise how much we need to protect the peace that has been delivered across Western and Central Europe over the last seven decades through the formation of the EU and its preceding versions. The model must continue to evolve as the EU offers prospects to aspirants on the Eastern front.


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