Usury has always been deemed mor-ally wrong. Since ancient times, even in the scriptures, penal sanctions were contemplated against this practice. Strangely, however, it's been only lately that our legislature decided to introduce the crime of usury within our penal code. As a point of fact this sanction was only introduced in 2002 and was subsequently amended in 2007. The relative article of law, that is 298C of the Criminal Code, introduces for such a crime a punishment of up to 18 months imprisonment and a fine of up to €25,000.

The rationale for introducing a criminal deterrent was seemingly the alarming number of victims who came forward claiming to have been ruined by overwhelming interest rates being imposed on them by certain individuals. Often, such interest would am-ount to higher sums than that ac-tually borrowed. Notwithstanding, however, few and remote have been the instances when people have been arraigned and charged under this article of law and I doubt whether anyone has ever been sentenced to prison accordingly.

Usury has remained a very topical subject indeed. In fact, it is persistently brought up in various public discussions where the dangers and dire consequences of this illicit practice are emphasised. Many are those, especially in commerce, who continue to be financially ruined and worse in this regard.

In the light of what has been said so far, I, therefore, find it difficult to comprehend how in certain instances it is the state itself that indulges in this awful exercise. An example that comes to my mind is the law regarding the collection of value added tax (VAT). I have no qualms about the necessity of the relative department to do its utmost in the collection of such an important source of revenue. I also agree to an extent that delays in such payments should indeed result in reasonable administrative penalties being imposed. I also concur with the law that, in certain instances, the retaining of VAT for one's personal needs amounts to the crime of misappropriation because, surely the individual would be retaining monies due to the state.

On the other hand, however, I am definitely against exaggerations and witch hunts. The way the law stands today, interests are charged on a monthly basis, which signifies that the government will collect well over the eight per cent which is that permitted by law.

Furthermore, what is worse is the fact that the department will charge compound interest, that is, interest on interest, and additional interest on the administrative penalties imposed, which penalties could be quite considerable.

On account of all this, at the end of the day, the individual who, more often than not, would be a trader or in business, would end up having to pay huge amounts in interests and penalties that by far would supersede the actual amount owed and this apart from having to face criminal action.

Experience has shown me how, often, quite a number of people in commerce end up entrapped into this vicious circle.

For reasons beyond their control, certain businessmen find themselves in economic difficulties and delay their VAT payments. In spite of the tight spot they would have found themselves in, and notwithstanding their many dependents, no assistance is afforded and the interests continue to accrue till these businessmen are declared bankrupt. This is certainly unethical and wrong.

It must be pointed out that, unlike in other instances, there is no corporate veil to limit the liability of company directors in this scenario and, thus, their company's bankruptcy will also signify their own individual ruin.

Worse still, unlike the rest of the civilised world, Malta does not sufficiently cater for bankruptcy legislation for individual persons, unlike what we find with regard to corporate entities. Thus, if a particular individual ends up bankrupt, not only will he lose all his particular assets but, most likely, will persist in debt till the grave, which debt could also be passed on to his heirs.

No one denies that our economy is presently passing through turbulent times, that we are in negative growth and that not enough investments are forthcoming. I opine that unless we take a more sensitive and sympathetic approach with regard to our business community, even in the light of what has been stated, fewer and fewer individuals will dare to invest their holdings and assets in the economy and this could lead to dire consequences.

Dr Herrera is a Labour member of Parliament.

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