We have a moral duty to pay taxes. Consider this in the context of Malta, where tax evasion is rampant. The informal economy denies the State of millions of euros that can be directed towards support to society. In certain countries, the size of the informal economy can be more than 20 per cent of GDP.

A media report revealed that the government is chasing €925 million in owed taxes. If you add VAT, €4.5bn is left unpaid, with 92 per cent considered uncollectable. The European Commission reported that Malta has one of the highest average of revenue losses, which amounted to 2.34 per cent of GDP between 2004 and 2016. The report stated that the majority of these losses were a result of tax evasion, amounting to €180 million.

Catholics are morally obliged to pay taxes. The Catechism of the Catholic Church spells this out clearly: “Submission to authority and co-responsibility for the common good make it morally obligatory to pay taxes…” Taxation raises the revenues necessary to pay for the public needs of society, health, education, public infrastructure and it addresses particularly the basic needs of the poor.

Taxation should be structured on the basis of progressivity, where the wealthier in society pay higher taxes and those below the poverty line are exempted from paying taxation.

Pope Francis spoke on taxation being “done well” if it is a sign of legality and justice, in an address to the Italian Revenue Agency in the beginning of last year: “It must favour the redistribution of wealth, looking out for the dignity of the poorest.” The pope pointed out that legality in fiscal matters served to “balance social relationships, removing strength from corruption, injustices and inequalities”. He said that impartiality in tax collection is a must as “no citizens are better based on their social class, but everyone is entrusted in good faith to be faithful builders of society”. Transparency is another important consideration, especially in the way the government spends money, whether on healthcare, education or infrastructure.

There is the need for a change in culture, where citizens are sensitised to the importance and relevance of not evading taxation

Yet, many Catholics evade taxation. Many argue that it will not make a difference if one pays or not as they are a tiny cog in the wheel. Others point at the waste, bribery, corruption and fraud committed by politicians and government officials; bad planning, irresponsible and reckless expenditure on mega-projects when there are priorities in society that are not being addressed.

There is the need for a change in culture, where citizens are sensitised to the importance and relevance of not evading taxation. This originates from the family and moves on to schooling. What happens in family homes is critical in creating honourable citizens and schools should reinforce the development of good citizens.

Meanwhile, democracy allows the electorate to decide on who governs them depending on how well their governments protect the State’s possessions and on how they spend public money. Governments are elected by citizens and, in a working democracy, they can be cast away if they do not deliver on the expectation of legality and transparency and if they are found to be corrupt.

Taxation is only “done well” if each one of us contributes by paying tax to a State that spends public money wisely and honestly.

 

jfxzahra@surgeadvisory.com