For decades, different administrations have tolerated severe abuse by those with an irrational sense of entitlement, who believe that the money they owe to the public purse is negotiable or just notional. This reality makes many honest taxpayers feel they are being short changed by the politicians they elect and task with managing public finance in an equitable manner.
A National Audit Report revealed the alarming extent of unpaid debt owed to government departments, with some serious numbers crunched. Of the nearly €6.4 billion owed by the end of 2021, the government only hopes to collect €166 million, with the rest classified as ‘not collectable’.
It is time to call in the debt collectors and not let politicians and public officials continue with this disgraceful, never-ending failure to promote fiscal equity.
There may be hundreds of reasons why money due to the government is not paid on time or at all. Businesses often delay paying taxes indefinitely, claiming that prompt payment could threaten their liquidity and force them to discharge workers. The worst-case scenario they envisage is that they would have to pay only a part of what is due after negotiating a settlement with the tax authorities.
Government departments like the Lands Authority and the Department of Social Security may not have the right processes in place to ensure that debtors pay their dues on time. These departments will try to mitigate their failure to promote fiscal rectitude by claiming they do not have the administrative and legal tools to enforce compliance.
The NAO report argues, “while prudence is important in reporting these figures, it is also imperative that a true and fair picture is given of the amounts owed to government”. This sound reasoning should motivate policymakers and their political masters to stop this abuse carried out by a sizeable section of the community.
The IMF and other international organisations have repeatedly urged the government to deal with the substantial tax leakages – revenue losses through the multitude of loopholes that riddle the financial system – that they identify in their scrutiny of the Maltese economy.
Lack of genuine political will to promote fiscal rectitude is undoubtedly the most crucial underlying cause of debt delinquency. No nice-sounding rhetoric will obliterate this embarrassing failure to always do what is right to protect the interests of the silent and honest majority.
Some taxpayers would argue that it is hardly their obligation to be honest, and pay their government dues in full and on time, if abusers are allowed to get away with delaying tactics, hoping their debt will be reduced following negotiations and amnesties or even hoping the amount they owe will be written off entirely.
Minister of Finance Clyde Caruana recently confirmed that the International Monetary Fund will be helping the government to tackle the uncollected debt problem. This is a positive development. The most likely technical recommendation will be to call in debt collectors empowered to enforce the law with effective processes.
Unviable businesses kept alive by tax authorities, unofficially absolved from paying their taxes when due, have no right to rely on the patience of honest taxpayers. Fiscal equity demands that fairness be the base rock of tax collection practices.
The staggering amount of overdue debt testifies to the failures of present and past administrations to collect what is due to the public purse and is an albatross around the metaphorical necks of our political administrators.
The government must urgently implement an effective tax and debt collection strategy. This is nothing less than a question of social justice, a principle much boasted about by the present administration.