Matthew Vella
Shadow minister for finance Charles Mangion said the new amnesty, announced Friday, to recoup unpaid income tax will not strengthen fiscal morality in the country, and instead punishes diligent taxpayers.
Finance minister Tonio Fenech announced that taxpayers who owe money to the Inland Revenue Department can benefit from a 90% reduction in the fines and interest accrued over the years. Defaulters will have to pay the reduced amount in full by 15 January and give up any objections or claims against the department.
While Fenech claimed the unpaid tax amounts to some €600 million, Charles Mangion yesterday told MaltaToday the real amount is more likely to be in the region of €100-110 million.
“When the National Auditor presented his report to the parliament’s public accounts committee, it was specified that the €600 million in income tax arrears was the sum total of accrued interest, penalties, and ex officio assessments. The real sum was something over €100 million,” Mangion said.
Asked for his take on the amnesty, Mangion said the government should explain which taxpayers will benefit from this amnesty.
“In these times, government should be stimulating purchasing power. But we don’t know which type of taxpayers will benefit from such an amnesty.”
Mangion added that those who settled their tax arrears and penalties will certainly feel some injustice. “It doesn’t punish those who delay payment, and it hurts companies and people who send their returns on time.”
Mangion also queried the reason for the amnesty. “If government wants to use the amnesty as a means to address the deficit, it is contrary to what Fenech said recently when he insisted on allowing the self-employed to delay payments and leave some cash in hand to revive the economy. It seems this has changed. At the end of the day, we need a real explanation for the amnesty.”
Tonio Fenech said the money collected from the amnesty would mitigate the loss of revenue government is anticipating because of the recession. Fenech projected a €60 million drop in revenue, with income tax alone registering a drop of €20 million below projections.
While admitting taxpayers would say the scheme was unfair for those who submit their returns on time, Fenech said the State had to strike a balance “between taking the long legal road of chasing defaulters… or giving this amnesty and hope to recoup the money.”
Fenech ruled out a similar amnesty for VAT defaulters.
Income tax defaulters will shortly receive a letter from the department informing them of the outstanding amount owed and the reduced sum they would pay if they took up the amnesty.
People with tax arrears from 1998 to date will have the penalties and interest deducted by 90%, while others with arrears that pre-date 1998 will be asked to pay 75% of the amount due. Taxpayers would also be obliged to fill in any missing income tax forms.
Fenech said the amount of tax due covered the whole 60-year period since the setting up of the department and the amnesty would also help the department clear up its record.
Any comments?
If you wish your comments to be published in our Letters pages please click button below. Please write a contact number and a postal address where you may be contacted.
Search:
MALTATODAY
BUSINESSTODAY
Download MaltaToday Sunday issue front page in pdf file format
All the interviews from Reporter on MaltaToday's YouTube channel.
