Statistics show that over a 12-month period we pay around €1,230 million in direct tax and around €920 million in indirect taxes. This adds up to €2,150 million.
The total amount of tax revenue represents around one-third of the gross domestic product, that is the wealth produced in the country.
This data about tax is important in the light of what is happening in Italy and Greece to combat tax evasion.
Some of the stories that have been emerging from these two countries are indeed shocking and one would hope not only that they are rare cases in Malta but rather that they simply do not exist.
For example, from controls undertaken by the Italian inland revenue service, it emerged that in certain cities, as many as three-fourths of retail outlets under-declare their income, some by as much as 50 per cent.
Greek television reported that in a particular island that has a population of a few hundred, there were many people who were claiming benefits for the blind, while they were perfectly healthy and actually working.
In another case businesses were levying taxes imposed by the state from their customers and then transferring the money abroad.
There was also the case of people in the social security department who continued paying pensions to people who died and split the amounts with the relatives of the dead people.
The Italian government launched a publicity campaign against tax evaders, calling them parasites of society.
The key message of this campaign is that if everyone pays the tax due, then everyone can benefit from efficient public services.
I had raised the issue of tax evasion several months back and a particular newspaper derided me for doing it and did not even condemn the tax evaders.
This shows how ambivalent we can all be about not paying tax and why tax evasion is such a tricky question, as if stealing from society is a crime that is of lesser importance than stealing from an individual.
Italy and Greece are not that different. While the tax authorities in Italy were under-taking their checks, there were many sections of the media and politicians who sought to criticise such checks.
In an article in the New York Times a few months back, the writer claimed that the Italian tax authorities say Italy loses an estimated $150 billion a year in undeclared revenues, while the national statistics authority places the underground economy to be about 17.5 per cent of gross domestic product − the third highest in Western Europe after Greece but before Spain.
Other experts place the percentage much higher. One wonders what the size of the underground economy in Malta is.
However, the New York Times article places Malta after Greece and before Italy – certainly not a fine accolade.
One may contemplate introducing in Malta the sort of tax evasion measures that Italy introduced or the name and shame policy that Greece has adopted. Some may consider such measures as too draconian.
On the other hand, mollycoddling the tax evaders is one of the main causes of the problems Greece is facing.
There could be a middle-of-the-road solution, which is raising the social stigma of tax evasion, such that there can no longer be any pride to be had in outsmarting the system.
Fundamentally, we need to stop thinking that tax evasion is a tricky question – it is not as without taxation our society cannot survive.
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