As if the increase in the surcharge were not enough, the Minister of Justice decided to concurrently put into effect a tax which was introduced last year, so that as from last week whoever asks the court to issue a piece of paper stating that there was no appeal from the decision of the court, she has to pay Lm10 (€23).
People who do this give me the impression that they do not pay the bills or that their income (which is so-so, considering today’s cost of living) is so extensive that they manage to pay all their bills, expenses and gifts they incur in connection with their political appointment.
There is something wrong somewhere and if they do not complain it does not bode well for the man in the street, who cannot be blamed for thinking that these politicians of ours are either very patriotic in that they are happy with what they get, and do not mind forking out the extra expenses from their pockets; or that their bills are being paid by their employer.
These people never complain about the cost of living, they never economize on their budget and they continue to lead the same life irrespective of how much the cost of living increases. I admire these people for knowing how to enjoy life on a restricted budget and I wish they could tell us how they manage.
Other people outside the spectrum have to bend over backwards to make ends meet, and it is no surprise that ‘more taxes’ also means more black market economy. Let’s face it; there is no incentive in this country to discourage you from resorting to the black market. Not only so, but the tables turn in favour of those who do practice black market economy, in that they are awarded, from time to time, with amnesties or with Presidential pardons.
It is not fair for the government not to commit itself that the surcharge will be fixed for a limited period of time: the surcharge factor has discouraged anyone from making any plans for fear that any increase will not be supported by their budgets. I do not know who is advising the government on this surcharge, but I am sure that they were very shortsighted in concluding that the only way to finance the increase in oil prices is only by increasing the surcharge at a time when the air conditioning is needed more than ever.

I noted that in many coffee shops in Valletta, where I spend most of my day, have gone back to the traditional fans and they switch on the air conditions very late in the day in order to try to save some money. If progress means having the luxury but being unable to afford the cost of keeping such luxury, then that is no progress at all. What is the point of having a market brimming with supplies that can make our life easier, and then being unable to afford the cost of keeping them?
This is like taking your horse to water and then not allowing it to drink. This is precisely what is happening in Malta at the moment. We boast that we are a free-market economy, that we do not need godfathers to purchase colour televisions, but at the same time the system introduced by the government is telling us that the things are there for us to see but not to use as their use is punished by a 150% surcharge.
It was very shortsighted of the government to solve the problem by imposing another tax: these decisions are taken by ungifted economists who are short of ideas and who jump to the last resort. The same thing happened during the Labour administration between 1996 and 1998 except that in those two years, the increase in water and electricity was deemed by the party now in government to be against the interest of the workers. Now, on the other hand, such a hefty fine that we have to pay to switch on the AC and drink cold water from the fridge is no longer considered as such.

I say shortsighted, because the least that the government could do was to compensate businessmen for the increase: an increase which in the long run is suffered by the consumer. One does not look at the increase in the surcharge per se, but at the ripple effect that this carries with it: whoever thinks that prices are going to remain the same is living in cuckoo land. Just wait and see.
There are many ways how compensation should have been granted: first of all, the VAT department must change its system of receipts, in that they must show the consumer how much VAT is paid on each product or service or food that we pay for. In this way the consumer will know if he is paying the normal 18% VAT, or less. Secondly, the Sixth VAT directive of the European Union allows member states to lower the VAT rate to 5% on certain services.
Let us take, for example, hairdressers, who are all worried to death that they will not be able to survive the surcharge without putting up their prices. At the same time they are reluctant to do so because there is a lot of competition in this sector. The government knows that the EU considers hairdressing as an essential service, unlike the government which still upholds the medieval idea that having your hair done is a luxury. Therefore, the EU allows member states to charge VAT at a rate as low as 5%.
It would have been fair on the part of the government had it lowered the VAT rate in this sector, so that the consumer would not suffer an increase in price and the hairdressers would not be in a position to either close down or put the prices up. Not only that, but the system is telling them to go underground, because it is better if they do the job at their client’s residence, in that they will not incur the expenses they are incurring at present: be it trading licenses, water and electricity at commercial rates, the surcharge on top of that, etc, etc.
I expect the GRTU to do this exercise in every sector where the EU allows VAT below the excepted minimum of 15%, and if the people are still quite about it, it is because they have not received the first bill with the new surcharge.
The government boasts that there are 30,000 who are exempt from paying the surcharge when in actual fact this is not something to boast about, because it means either that there are 30,000 people in Malta below the poverty line, or that there are 30,000 in Malta taking the commissioner of Inland Revenue for a ride. I do not know what criteria are applied, and if they take into account the lifestyle of some of these people when it comes to considering their applications. Still, it is no consolation for the genuine taxpayers to be told that there are 30,000 who are exempt from paying the surcharge.
What we need in Malta are good economists who know how more income can be generated in this country without the need to pay more taxes. So far, none have come forward.