Income tax totalling over €2.4 million, owed by 1,061 taxpayers, has been written off as a result of the landmark sentence issued by the Court of Appeal on 10 January 2007, which decreed that government could not collect the sum of Lm1,885 owed by an individual taxpayer for the period between 1987 and 1990.
Opposition leader Dr Alfred Sant raised the issue in his reply to the President’s speech from the throne when Sant alleged that a “tax amnesty” of €2.5 million had been issued on the eve of the March 8 election.
The Ministry of Finance has strongly denied that government issued any amnesty in that period.
But it did say that in line with the Appeals Court decision, €2,459,782 has been written-off as “uncollectible amounts”, a spokesperson for the ministry told MaltaToday.
Still, the government waited a full year – precisely until the last weeks before the election – before writing off the tax dues of another 1,061 taxpayers who are presumably in the same position as Alfred Caruana: the taxpayer who originally took the government to court.
Effectively the Appeals Court’s decision, delivered by Judge Philip Sciberras, annulled the State’s power to use a clause in the law that enabled it to collect past dues beyond the eight-year prescription, enacted in another clause in the same law.
According to the disputed clause, the government could still collect its dues if procedures were initiated before 31 December 2005 for cases in which the legal prescription expired before 2003.
In passing sentence, the Appeals Court decreed that while the court understood that the Tax Department faced administrative difficulties which hamper its ability to act fast, it also expressed its “firm conviction” that legislation should not be enacted to temporarily make up for the government’s bureaucratic deficiencies.
The court decreed that in this case, the sole purpose of the law was dictated by the rigid and exclusive interests of the Tax Department. Finally, the court decided to declare the amount due by Alfred Caruana as prescribed by law.

jdebono@mediatoday.com.mt