Bejgħ tal-passaporti u l-prinċpju ta’ lealtà fl-Unjoni Ewropea

Iktar kmieni din il-ġimgħa, l-kumitat tal-Parlament Ewropew dwar il-libertajiet ċivili u l-ġustizzja,  huwa u jiddiskuti rapport dwar il-bejgħ tal-passaporti (jirreferu għalihom bħala golden passports) mill-istati membri, jemfasizza li dan hu oġġezzjonabbli etikament, legalment u ekonomikament u dan apparti li dan joħloq bosta riskji għas-sigurtà.

Tul is-snin, il-Ministri, kemm f’Malta kif ukoll barra, emfasizzaw li ċ-ċittadinanza, fl-Unjoni Ewropeja, hi materja riżervata għall-istati membri. Hekk hu, imma mhux b’mod assolut. Il-prinċipju ta’ lealtà fit-trattati Ewropej ilewwen il-ħidma tal-istati membri fl-Unjoni. Anke l-oqsma li huma kompetenza nazzjonali għandhom ikunu meqjusa f’dan id-dawl.

Ħadd ma jikkontesta li ċ-ċittadinanza hi kompetenza tal-pajjiżi membri. Hekk għandu jkun. Imma meta nikkunsidraw il-bejgħ taċ-ċittadinaza hemm ħafna implikazzjonijiet oħra, ta’ gravità mhux żgħira. It-trattati tal-Unjoni Ewropeja dan jispjegawh bħala obbligu ta’ kooperazzjoni sinċiera  bejn il-pajjiżi membri, obbligu li bosta drabi huwa mfisser bħala l-prinċipju ta’ lejaltà:  lejaltà, jiġifieri bejn il-pajjiżi membri infushom.

Riċentment, l-amministrazzjoni immexxija minn Robert Abela fasslet emendi mhux żgħar għall-proċess li bih tkun akkwistata ċ-ċittadinanza b’investiment. Il-programm (Individual Investor Programme) inbidel ma skema residenzjali li eventwalment tista’ twassal għal ċittadinanza. Għalkemm l-Unjoni Ewropeja kienet infurmat b’dan it-tibdil, is-Segretarju Parlamentari responsabbli għaċ-ċittadinanza, Alex Muscat, indika li ma kien hemm l-ebda rispons mill-Kummissjoni Ewropeja.

Il-Parlament Ewropew ser jiddiskuti dan kollu fil-plenarja tiegħu tax-xahar id-dieħel.  L-abbozz tar-rapport, b’numru ndaqqas ta’ emendi, jemfasizza li l-iskemi taċ-ċittadinanza b’investiment “hemm it-tendenza li jkunu f’dawk l-istati membri li huma l-iktar esposti għal riskji konnessi mas-segretezza finanzjarja, bħall-evażjoni tat-taxxa, l-ħasil tal-flus u l-korruzzjoni.” 

Fost dawk li kisbu ċ-ċittadinanza Maltija b’investiment insibu lil: Anatoly Hurgin, akkużat bi frodi, kuntrabandu u ħasil ta’ flus kemm fl-Istati Uniti kif ukoll fl-Iżrael, Liu Zhongtian, biljunarju involut fl-aluminju, għaddej proċeduri kriminali fl-Istati Uniti dwar evażjoni  ta’ madwar żewġ biljun euro f’tariffi  Amerikani,  Boris Mints, biljunarju ieħor li qiegħed jiffaċċja akkużi dwar frodi fir-Renju Unit,  Pavel Melnikov, ukoll biljunarju li qiegħed ikun investigat fil-Finlandja dwar ħasil ta’ flus u frodi, u Mustafa Abdel-Wadood li ammetta akkuzi dwar frodi fl-Istati Uniti. Dawn ġew identifikati mill-istampa f’Malta bħala lihumafost dawk li xtraw passaport Malti. Ħadd mhu ser jeskludi li hemm iktar, għax dawn it-tip ta’ skemi huma kalamita għal dawn it-tip ta’ nies..

Dawn, u oħrajn, ħadu iċ-ċittadinanza minkejja li suppost li l-applikazzjonijiet tagħhom kienu eżaminati b’reqqa liema bħala!

Fid-dawl ta’ dan kollu l-logħob ta’ Bernard Grech li jirrifjuta li jieħu sehem fi proċess ta’ konsultazzjoni dwar il-ħatra ta’ regulatur ġdid għall-iskema ta’ ċittadinanza b’investiment tibgħat messaġġ żbaljat. Regulatur li jkollu l-barka ta’ Bernard Grech mhux ser itejjeb l-iskema taċ-ċittadinanza.

Irrispettivament minn kemm jinbidlu r-regoli dwar l-iskema tal-bejgħ tal-passaporti, din tibqa’ mhux aċċettabbli fil-prinċipju. Kif jingħad fir-rapport pendenti quddiem il-Parlament Ewropew iċ-ċittadinanza Ewropeja mhiex għall-biegħ.

Ir-rapport quddiem il-Parlament Ewropew jgħid li l-iskemi taċ-ċittadinanza b’investiment fihom ħafna riskji u mhumiex kompatibbli mal-prinċipju ta’ kooperazzjoni meħtieġa bejn l-istati membri tal-Unjoni Ewropeja. Fid-dawl ta’ dan għandhom jispiċċaw sa mhux iktar tard mis-sena 2025 jgħidilna ir-rapport tal-Parlament Ewropew..

Il-flus jistgħu jkun utli, jgħid Bernard Grech, kieku l-iskemi jkunu trasparenti.  Hi l-istess attitudni li l-PN fil-Gvern daħħal fis-sistema ta’ tassazzjoni meta spiċċa daħħal proposti li jinkoraġixxu l-evażjoni tat-taxxa.  

L-iskema tal-bejgħ tal-passaporti  flimkien mal-abbuż kontinwu tas-sovranità tal-pajjiż fil-qasam tat-tassazzjoni bit-tnaqqis fir-rati ta’ taxxa għal kumpaniji barranin li b’hekk ġew inkoraġġiti jevadu t-taxxi ta’ pajjiżhom huma uħud mir-raġunijiet li wassluna sal-lista l-griża. Tul dawn l-aħħar xhur imma, l-Ministru tal-Fnanzi beda jċedi u jidher li issa mexjin lejn li naċċettaw rata minima u armonizzat ta’ taxxa.

Bħala partit ilna ninsitu fuq din it-triq. Sfortunatament b’wiċċna minn quddiem nistgħu ngħidu li ghidna ċar u tond kif kienu l-affarijiet. Issa jmiss li tispiċċa l-iskema tal-bejgħ tal-passaporti ukoll. M’għandniex bżonn li jkunu istituzzjonijiet barranin li jgħidulna x’inhu tajjeb u x’inhu ħażin. Kapaċi, jekk irridu, li dan nagħmluh aħna stess. 

Huma biss membri parlamentari eletti mill-lista tal-kandidati ta’ ADPD li jistgħu jassiguraw li jsir it-tibdil kollu li hu meħtieġ. Bernard Grech u l-PN ma jistgħux ikunu is-soluzzjoni. Huma parti mill-problema.

ippubblikat fuq Illum: il-Ħadd 20 ta’ Frar 2022

Golden passports & the EU’s loyalty principle

Earlier this week, the European Parliament’s Committee on Civil Liberties, Justice and Home Affairs, when discussing a draft legislative initiative report emphasised that golden passports are objectionable ethically, legally and economically and pose several serious security risks.

Over the years government Ministers, in Malta and elsewhere, have emphasised that issues of citizenship and passports are a national reserved matter, within the European Union.  They are right, but, only to a certain extent. The principle of loyalty in the EU treaties underpins the functioning of the individual member states within the Union. Even the national competencies have to be implemented with this principle in mind.

No one contests that nationality issues are a national competence. They should remain so. There is however much more than state competence at stake. Article 4.3 of the Treaty on the European Union explain this as the principle of sincere cooperation, at times referred to as the loyalty principle: loyalty, that is, towards the other European member states.

Recently, the Robert Abela administration has sought to reform the process of acquiring citizenship by investment. The original rules were overhauled. The IIP (Individual Investor Programme) was replaced by a residency scheme which could, eventually lead to acquiring citizenship. The EU was informed of all this and Parliamentary Secretary Alex Muscat, responsible for citizenship has indicated that there has been no feedback on the matter from the EU Commission.

The EU Parliament will discuss the matter in plenary next month. The draft report which, with a multitude of amendments proposed, will be considered, emphasises among other matters that such Citizenship by Investment (CBI) “schemes tend to be located in Member States that are particularly prone to risks related to financial secrecy, such as tax avoidance and money laundering, and corruption.”

Among the new Maltese citizens by investment, one finds: Anatoly Hurgin, charged with fraud, smuggling and money laundering in the US and Israel, Liu Zhongtian, an aluminium billionaire indicted in the US on avoidance of €2 billion in American tariffs, Boris Mints, a billionaire facing fraud charges in the UK, Pavel Melnikov, another billionaire under investigation in Finland for money laundering and tax fraud and Mustafa Abdel-Wadood who pleaded guilty to conspiracy and fraud charges in the United States. These have been identified by the Maltese press. I would not exclude that there are more of them as such schemes are a natural attraction to them. So far they have avoided the radar of public scrutiny.

Quite a collection! All of them were okayed by Malta’s “rigorous due diligence”!

In view of the above, Bernard Grech’s postering through his refusal to engage in consultation on the appointment of a new regulator for golden citizenship sends a wrong message. A regulator acceptable to Bernard Grech will not make the citizenship by investment scheme any better.

The golden passport scheme, irrespective of the tinkering with the rules carried out, is unacceptable in principle. EU citizenship, says the EU Parliament report currently under consideration “is not a commodity that can be marketed or sold and has never been conceived as such by the Treaties.”

European values are not for sale, says the said report: “in the light of the particular risks posed by CBI schemes and their inherent incompatibility with the principle of sincere cooperation, CBI schemes should be phased out fully across the Member States”. The proposal before the EU Parliament is that these should be phased out by 2025.

The money justifies it, says Bernard Grech, if only it were more transparent. It is the same attitude which the PN-led government built into our taxation system, when it introduced measures encouraging tax avoidance.

The golden passport scheme coupled with the continuous abuse of Malta’s tax sovereignty through offering substantial tax discounts to foreign commercial entities, encouraging tax avoidance, are part of the reasons which have led to Malta’s grey-listing. During the last months, Malta’s Finance Minister has finally capitulated and he is now steering the country towards the acceptance of a harmonised minimum tax rate.

Greens have been advocating this course of action for ages. Unfortunately, we can hold our heads high and state: we told you so! The golden passport scheme should be next for the chop. We do not need foreign institutions to tell us what is right or wrong. We can do it ourselves.

Only members of parliament elected from the list of ADPD candidates can ensure that the required overhaul is carried out. Bernard Grech and his PN cannot be the solution. They are part of the problem.

published on The Malta Independent on Sunday : 20 February 2022

Meta l-istat jinkoraġixxi l-evażjoni tat-taxxa

F’indirizz li għamlet nhar it-Tnejn liċ-Chicago Council on Global Affairs, Janet Yellen, Segretarju għat-Teżor tal-Istati Uniti, ippreżentat l-argument favur taxxa minima applikabbli għall-korporazzjonijiet multinazzjonali fuq livell globali, irrispettivament minn fejn huma bbażati.  Proposta ta’ din ix-xorta, kif rappurtat min-New York Times, ikollha s-saħħa li żżomm lil dawn il-kumpaniji milli jċaqilqu l-profitti tagħħom minn post għall-ieħor biex jevadu l-ħlas tat-taxxi dovuti minnhom.

Meta jitnaqqsu it-taxxi biex tinġbed l-industrija u n-negozju, emfasizzat  Ms Yellen, hemm is-sogru li mmissu l-qiegħ: fejn ser tieqaf? Ma nistgħux nibqgħu sejrin hekk. Il-kompetittività mhiex biss kif kumpanija tmur fil-konfront ta’ kumpaniji oħra.  Hi ukoll il-mod li bih nassiguraw  li l-gvernijiet ikollhom sistemi ta’ ġbir ta’ taxxa li jkunu stabbli b’mod li jistgħu jiġbru biżżejjed fondi x’jinvestu f’servizzi publiċi u jkunu f’posizzjoni li jirreaġixxu fi żmien ta’ kriżi. Hu meħtieġ li ċ-ċittadini bejniethom jerfgħu b’mod ġust il-piż tal-finanzjament tal-gvern.”

Din il-materja hi diġa fuq l-agenda tal-Unjoni Ewropeja. Hi opposta b’qawwa minn Malta, il-Lussimburgu, l-Irlanda u pajjiżi oħrajn.  L-argument dwar l-armonizzazzjoni tat-tassazzjoni hu parti integrali mill-ġlieda kontra l-evażjoni tat-taxxa u l-ħasil tal-flus.

Hu ta’ sfortuna li Malta (u pajjiżi oħrajn) repetutament abbużat mis-sovranità tagħha fuq materji ta’ taxxa. Huwa riżultat ta’ dan l-abbuż repetut li l-proposta dwar l-armonizzazzjoni tat-taxxa qabdet l-art b’mod li issa hi appoġġata ukoll mill-Istati Uniti tal-Amerka.  Malta rmiet il-vantaġġ kompetittiv tagħha billi abbużat minnu repetutament. Il-ħsara lir-reputazzjoni tal-pajjiż hi għaldaqstant awto-gol mill-kbar.

Malta ma tistax tkun kredibbli fil-ġlieda kontra l-evażjoni tat-taxxa u l-ħasil tal-flus jekk ser tibqa’ tiffaċilita l-evażjoni tat-taxxa fuq skala internazzjonali.  Xi snin ilu il-Grupp tal-Ħodor fil-Parlament Ewropew kien ippubblika studju intitolat Toxic Tax deals: when BASF’s tax structure is more about style than substance. Dan ir-rapport kien svela kif tul is -snin, il-kumpanija Ġermaniża ġgant tal-kimika BASF kien irnexxielha tevita u tiffranka l-ħlas ta’ biljun euro f’taxxi fuq 4 snin billi użat lill-Malta għal dan l-iskop. Dan sar billi kumpanija sussidjarja ġiet reġistrata f’Malta u t-taxxi dovuti, għax l-azzjonisti mhux residenti f’Malta, ħadu lura 6 euros minn kull 7 li kellhom iħallsu f’taxxa!

Il-każ tal-Korporazzjoni Amerikana Apple fl-Irlanda, kif nafu, wassal għall-evażjoni ta’ 13-il biljun euro f’taxxi. L-iskandlu Luxleaks fil-Lussimburgu ukoll wera kif dan il-pajjiż żgħir fost il-fundaturi tal-Unjoni Ewropeja ukoll kien qed jinkoraġixxi l-evażjoni tat-taxxa.

Dawn huma ftit mill-eżempji. Bla dubju hemm bosta oħra li s’issa huma moħbija mill-iskrutinju pubbliku. Bħala riżultat ta’ dan kollu madwarna għaddejja evażjoni ta’ biljuni ta’ euro ta’ taxxi, kontinwament. Malta, l-Irlanda, il-Lussimburgu u xi pajjiżi oħra jiġbru parti żgħira mit-taxxi dovuti bħala ħlas talli jippermettu din l-evażjoni ta’ taxxa fuq skala pjuttost kbira.

F’Malta dan kollu kien possibli bħala riżultant tal-hekk imsejjaħ “kunsens nazzjonali” bejn il-PLPN dwar il-qasam finanzjarju. “Kunsens” li ilu fis-seħħ numru ta’ snin. Il-ħsara lir-reputazzjoni ta’ Malta li seħħet u għad qed isseħħ bħala riżultat ta’ dan kollu, għaldaqstant, ma jġorriex il-Partit Laburista waħdu. Il-Partit Nazzjonalista ukoll għandu resposabbiltà xi jġorr. Għalhekk fuq dawn il-materji in-Nazzjonalisti u l-Labour dejjem iħokku dahar xulxin.  

Sfortunatament l-evażjoni tat-taxxa u l-ħasil tal-flus huma ħafna drabi konnessi. Bosta drabi fejn issib waħda issib l-oħra ukoll.

It-triq il-quddiem m’għandiex ikollha impatt fuq is-sovranità fil-qasam tat-tassazzjoni kif determinat mit-trattati Ewropej permezz tal-ħtieġa tal-unanimità f’materji konnessi mat-taxxa. Imma hemm bżonn urġenti li l-qasam tal-politika fiskali ukoll jinbena fuq prinċipji etiċi b’saħħithom. U mhux dan biss. Għandu jkun assigurat darba għal dejjem li Malta ma tibqax tiddependi minn dħul ġej mill-evażjoni tat-taxxa.

Għax id-dipendenza tal-ekonomija Maltija fuq l-evażjoni tat-taxxa (u l-bejgħ tal-passaporti) hi ta’ inkwiet kbir għall-pajjiż. L-industrija tal-evażjoni tat-taxxa hi sors ta’ dħul kif ukoll ta’ impiegi li it-tnejn li huma inevitabilment jintilfu fi żmien qasir. Wasal iż-żmien li nippjanaw għal futur nadif, futur li mhux iktar dipendenti fuq l-evażjoni tat-taxxa.

Ippubblikat fuq Illum: il-Ħadd 11 t’April 2021

When the state encourages tax evasion

In a speech delivered on Monday to the Chicago Council on Global Affairs, Janet Yellen, US Treasury Secretary, made the case for a global minimum tax applicable to multinational corporations irrespective of where they locate their headquarters. Such a proposal, reported the New York Times, would prevent companies from shifting profits to evade taxes.

Lowering tax rates to attract business, emphasised Ms Yellen, is a race to the bottom which has to be addressed. Competitiveness is not just how companies fare against other companies. It is also about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crisis, and that all citizens fairly share the burden of financing government.

This issue is already on the agenda of the EU facing fierce opposition from Malta, Luxembourg, Ireland as well as others. The issue of tax harmonisation is an integral part of the fight against tax evasion and money laundering.

It is unfortunate that Malta (and others) have been repeatedly abusing its tax sovereignty. It is as a result of such repeated abuse that the proposal for tax harmonisation is gaining ground such that it now has the support of the United States of America too. As a result of greed Malta has squandered a competitive advantage by abusing it repeatedly and continuously. The resulting reputational damage is hence an own goal.

Malta (and the other countries) cannot be credible in the declared fight against tax evasion and money laundering if it keeps facilitating tax avoidance on an international scale. Some years back the Green Group in the European Parliament had published a study entitled Toxic Tax deals: when BASF’s tax structure is more about style than substance. This report reveals that over the years, the German chemical giant BASF used Malta to avoid the payment of one billion euros in taxes. This was done using the “legal” possibility to have tax refunds of up to six sevenths of the tax due in such cases where shareholders are not resident in the Maltese islands. Tax avoidance is tax evasion sanctioned by the state.

The Apple Corporation case in Ireland as a result of which another €13 billion in taxes were avoided is another example of tax evasion sanctioned by the state of Ireland. Luxleaks had also revealed countless of other examples as a result of which Luxembourg too embarked on state encouraged tax-evasion.

These are just some examples of many: the proverbial tip of the iceberg. There are undoubtedly countless of others, currently below the radar of public scrutiny, as a result of which the payment of billions of euros in taxes are being continuously avoided. Malta, Ireland, Luxembourg and other countries receive a small part of the actual tax due as a result of facilitating this state encouraged tax evasion.

Locally this scam is the result of the PNPL “national consensus” on financial institutions and fiscal policy in force for a number of years in Malta. The responsibility for the resulting reputational damage is thus not one to be shouldered by the Labour Party on its own, it has help from the PN which has continuously buttressed this abusive behaviour.

Unfortunately, tax evasion and money-laundering are inseparable twins!

The way forward need not impact the tax sovereignty afforded by the EU treaties through the unanimity rule on taxation issues. However, it necessitates ensuring that policy on all fiscal issues is also founded on sound ethical principles.

In addition to ensuring that fiscal policy is not in any way unethical it is about time that Malta does not any more, in any way, depend on tax avoidance.

The dependence of Malta’s economy on tax avoidance (and the sale of citizenship) is very worrying. The tax avoidance industry is a source of both revenue to the state and employment opportunities, both of which will be lost in the not-so-distant future. It is about time that we start planning for a cleaner future, a future that is, which is not dependent on the tax avoidance industry!

Published in the Malta Independent on Sunday : 11 April 2021

Anke Bendu bil-problemi ma’ tat-taxxa

Il-gazzetti tal-lum qalulna li wara kollox, dwar it-taxxi anke Bendu, jiġifieri Bernard Grech, għandu storja ta’ taxxi b’lura.

Il-Malta Today qaltilna: PN leadership candidate has a history of unpaid taxes. Is-Sunday Times qaltilna: Bernard Grech sorts out his tax dues. L-Illum, min-naħa l-oħra tgħidilna li: Grech ma jgħidx kif ħallas €62,000 f’taxxa u VAT li kellu pendenti fuq medda ta’ snin.

Hemm ħafna x’jiġi spjegat minn Bendu Grech. Fi ftit kliem kif jista’ jitwemmen meta jitkellem dwar il-ġustizzja soċjali meta kellu dawn il-problemi kollha mal-awtoritajiet tat-taxxa? Il-fatt li ftit ilu ftiehm ma jistax inessi li sa dakinhar kien jaħsibha mod ieħor.

It-taxxa hi strument ta’ ġustizzja redistributtiva u min jevadi jew jipprova jevadi t-taxxa jkun qed jaħrab mir-responsabbiltajiet tiegħu. Fuq dan m’hemmx x’tagħżel bejn Bendu u Drinu : it-tnejn pezza waħda.

The budget: beyond the €s

Liza Minelli’s song “Money makes the world go round” is the underlying theme of the Budget speech delivered by Finance Minister in Parliament last Monday. The message driven home was that money and the accompanying affluence clearly indicate that we have never had it so good and that handouts to all are not a problem, both to those who need them, and, more importantly to those who don’t.

Today, taxation is a dirty word in our political lexicon: hence, it was suggested that the message that no increases in existent taxes or new taxes have been proposed is a positive one by the Honourable Minister. Handouts are for all, almost. First for those in need, secondly for most of the rest. The dictum “from each according to his means, to each according to his needs” no longer has any significance when trying to understand the political philosophy underlying the budget of this “labour” government.

Taxation collected in Malta apparently only has some significance when taxing foreign companies operating outside Maltese territory but having some small office, or just a letterbox, on this rock. This is done so that they can avail themselves of reduced taxation rates, substantially lower that those payable in the countries where they operate.

Similarly, companies operating in the financial services sector benefit from a tax package which offers them substantial savings on their tax bills in order to entice them to set up shop.

The government thinks it is smart, but all it is doing is encouraging tax avoidance. Malta’s message is clear: those who want to avoid tax in their country are welcome as long as they are prepared to pay a small part of the taxes avoided to the Maltese exchequer.

In this respect, the case study entitled “Toxic Tax Deals. When BASF’s Tax Structure is more about style than substance” published by the Green Group in the European Parliament around two years ago is indicative. In that study, it was concluded that BASF, the German chemical giant with its headquarters in Ludwigshafen, used mismatches in national tax systems in order to avoid paying its taxes. It is estimated that, over a five-year period spanning 2010 to 2014, BASF avoided the payment of close to one billion euros in taxes, paying instead a small amount of the taxes avoided, in gratitude for this wonderful opportunity made possible by the Maltese governments, blue and red.

In this context the Finance Minister’s declaration against tax evasion, tax avoidance and money laundering is deemed mere rhetoric. It has to be viewed in the context of the Panama Papers saga, as well as the established fact that a Cabinet Minister and the Chief of Staff in the Office of the Prime Minister set up companies in Panama, a tax haven, and no punitive action was taken against them. With this background, the Minister’s sanctimonious declaration is in no way credible.

The Budget proposals strengthen the social safety net as it assists the vulnerable financially. However, the quality of life is not measured solely by financial metrics. The Budget has various green gaps that affect our quality of life.

The welfare of cars assumes an importance over human quality of life, as government considers it is important to widen and improve roads in order to facilitate the passage of cars, thereby aiming at reducing congestion. An inverted sense of logic: reduction of the number of cars on our roads should have been the target as that is the real and actual problem. Widening roads and improving road infrastructure with flyovers and underpasses only serves to grow the number of cars on our roads, thereby increasing the problem. Providing and facilitating alternative transport is the only solution. Paying lip service to alternative means of transport but simultaneously financing an exponential
increase of the problem signifies that we still have to learn the ABC of transport policy.

The government’s own transport master-plan places considerable emphasis on the need to reduce cars from our roads but it seems that the government is not interested.

Therefore, we have a government which is more interested in the welfare of cars than in our quality of life.

This is just one example. There are countless of others.

The Budget loses an opportunity to make a lasting difference in a number of areas important for our quality of life that goes beyond finances.

published (online) at Malta Independent

Il-baġit : lil hinn mill-€s

Id-diska ta’ Liza Minelli “Money makes the world go round” donnha li hi t-tema li madwarha hu minsuġ id-diskors tal-Baġit li nqara mill-Ministru tal-Finanzi nhar it-Tnejn fil-Parlament. Il-messaġġ ċar li wasal fi djarna kien li l-flus u l-“ġid” li hawn jagħmlu possibli li tirċievi ċekk id-dar, kemm jekk għandek bżonnu kif ukoll jekk m’għandekx.

F’dawn iż-żmienijiet il-kelma taxxa donna saret kelma moqżieża fid-dizzjunarju politiku: għalhekk ġie suġġerit li n-nuqqas ta’ taxxi ġodda, inkella ta’ żieda fit-taxxi eżistenti kien element pożittiv fid-diskors tal-Onorevoli Ministru. Ċekkijiet għal kważi kulħadd. L-ewwel għal dawk li għandhom il-ħtieġa u mbagħad għall-parti l-kbira tal-bqija. Dak li kien jingħad li “jittieħed mingħand kull wieħed skont ma jiflaħ, u jingħata lil kulħadd skont il-ħtiġijiet tiegħu” donnu li ma għandu l-ebda piz illum meta nippruvaw nifhmu l-filosofija politika li fuqha hu mfassal dan il-baġit ta’ Gvern “Laburista”.

It-taxxa li tinġabar f’Malta donnha li hi utli biss meta tinġabar mingħand kumpaniji barranin li fil-waqt li joperaw barra mit-teritorju Malti jkollhom uffiċċju żgħir jew sempliċi letterbox f’Malta. Dan biex ikunu jistgħu jibbenefikaw minn rati ta’ taxxa sostanzjalment iktar baxxi minn dawk li jkunu soġġetti għalihom fil-pajjiżi fejn joperaw.

Diversi kumpaniji fis-settur tas-servizzi finanzjarji ukoll jibbenefikaw minn rati ta’ taxxa li bihom jiffrankaw sostanzjalment minn dak li jħallsu band’oħra.

Il-Gvern mingħalih li għamel opra. Fir-realtá qed jibgħat messaġġ li Malta tilqa’ li min irid jevadi t-taxxa f’pajjiżu, kemm-il darba jkun lest li jħalli xi ħaġa minn dak li jiffranka fil-kaxxa ta’ Malta!

F’dan il-kuntest l-istudju intitolat Toxic Tax Deals. When BASF’s Tax Structure is more about style than substance. ippubblikat mill-Grupp tal-Ħodor fil-Parlament Ewropew madwar sentejn ilu jispjega b’mod ċar x’inhu jiġri. F’dan l-istudju ġie konkluż li l-BASF, ġgant Ġermaniz fil-qasam tal-industrija kimika ibbazat f’Ludwigshafen, jagħmel użu minn differenzi fis-sitemi nazzjonali tat-taxxa biex jevita milli jħallas it-taxxi dovuti. Huwa stmat li, tul il-ħames snin bejn l-2010 u l-2014, BASF evitaw madwar biljun euro fi ħlas ta’ taxxi. Minflok ħallsu ammonti ferm inqas, b’ħajr lill-gvernijiet Maltin (blu u ħomor) talli għinhom jevitaw dawn it-taxxi kollha.

F’dan il-kuntest id-dikjarazzjoni tal-Ministru tal-Finanzi kontra l-evażjoni tat-taxxa u l-ħasil tal-flus jidhru dak li fil-fatt huma: eżerċizzju ta’ retorika. Inżommu f’moħħna ukoll il-kaz tal-Panama Papers, li kien stabilixxa l-fatt li membru tal-Kabinett u ċ-Chief of Staff fl-uffiċċju tal-Prim Ministru kellhom kumpaniji fil-Panama, pajjiż rinomat għall-evażjoni tat-taxxa, u dwar dan ma kienu ittieħdu l-ebda passi kontra tagħhom. Fid-dawl ta’ dan, id-dikjarazzjoni ta’ “qdusija” da parti tal-Onorevoli Ministru hi nieqsa minn kull kredibilitá.

Il-proposti tal-Baġit isaħħu ix-xibka soċjali u dan billi jgħinu finanzjarjament lill-vulnerabbli. Imma l-kwalitá tal-ħajja ma titkejjilx biss f’termini ta’ flus. Fil-Baġit hemm bosta miżuri ambjentali nofs leħja.

Il-ħarsien tal-karozzi huwa iktar importanti mill-kwalitá tal-ħajja għalina. Il-Gvern jikkunsidra li hu iktar importanti li jwessa’ t-toroq biex jiffaċilita ċ-ċaqlieq tal-karozzi u b’hekk jipprova jnaqqas il-konġestjoni. Loġika rasha l-isfel. Il-mira kellha tkun it-tnaqqis tal-karozzi mit-toroq tagħna għax dik hi l-problema. It-twessiegħ tat-toroq u t-titjib tal-infrastruttura bil-kostruzzjoni ta’ flyovers lil hawn u lil hemm iwassal biss għaż-żieda ta’ karozzi fit-toroq tagħna u b’hekk tikber il-problema tal-konġestjoni. L-unika soluzzjoni hi li jkun inkoraġġit bis-serjetá t-trasport alternattiv. Il-Gvern qiegħed fl-istess nifs jinkoraġixxi kemm lit-trasport alternattiv kif ukoll iż-żieda fenomenali ta’ karozzi: dan ifisser li għadu ma tgħallem xejn. Wara kollox huwa l-pjan nazzjonali tat-trasport imfassal minn dan il-Gvern stess li jpoġġi quddiemna l-mira tat-tnaqqis tal-karozzi mit-toroq tagħna. Imma jidher li l-Gvern qed iwarrab il-pjani tiegħu stess.

L-Gvern hu iktar interessat mill-ħarsien tal-karozzi milli mill-ħarsien tal-kwalitá tal-ħajja tagħna lkoll.

Dan hu biss eżempu wieħed. Hemm bosta oħrajn.

Il-Baġit qed jitlef l-oportunitá li jagħmel differenza f’numru ta’ oqsma fejn li troxx il-flus mhux biżżejjed.

 

Ippubblikat fuq Illum: Il-Ħadd 28 t’Ottubru 2018

Undermining the rule of law

The “rule of law” is a basic democratic principle codified in the laws of democratic countries.

We are all servants of the law in order to be free and in a democracy, the law should apply to one and all without exception. A weak “rule of law” thus results in less and less democracy until one is left with only a free-standing façade.

The law is there to be observed: it should be a constraint on the behaviour of individuals as well as on that of institutions. All individuals ought to be subject to the same laws, whereas institutions are there to protect us all, not just from ourselves but also from all possible attempted abuse of authority by the institutions themselves.

It is within this context that the report of the ad hoc delegation of the Committee of Civil Liberties, Justice and Home Affairs of the European Parliament has to be considered. The report is an illustration of how others see the state of our democracy, even though at points it may be inaccurate.

The delegation’s brief was to investigate “alleged contraventions and maladministration in the application of Union law in relation to money laundering, tax avoidance and tax evasion”.

The observations and conclusions of the delegation in its 36-page report are certainly not edifying. The common thread running through the different pages of the report is that in Malta there are more masters of the law than servants; this is how others see us.

In my opinion they are not far off the mark. The report repeatedly emphasises the point that the law should be observed in both letter and spirit.

The institutions in Malta are very weak. I would add that they are weak by design, in other words they are designed specifically to genuflect when confronted by crude political power. This is reflected both in the type of appointees as well as in the actual set-up of the institutions which are supposedly there to protect us.

The above-mentioned report observes, for example, that none of the Financial Intelligence Analysis Unit (FIAU) reports on Maltese politically exposed persons (PEPs) were investigated by the Police, notwithstanding the fact that the said reports had been forwarded to them “for any action the Police may consider appropriate”.

Is it too much to expect that the police do their duty in at least investigating? The fact that no such investigation was carried out drives home the clear unequivocal message that for the police, PEPs are not subject to the law like any other person. The EU Parliament report is very clear as to why such investigations are essential. In fact it is stated that: “Persons perceived to be implicated in serious acts of corruption and money- laundering, as a result of Panama Papers revelations and FIAU reports, should not be kept in public office and must be swiftly and formally investigated and brought to justice. Keeping them in office affects the credibility of the Government, fuels the perception of impunity and may result in further damage to State interests by enabling the continuation of criminal activity.”

The question to be asked is: why is this possible? Why do Maltese authorities tend to bend the rules or close an eye here and there?

You may find an indication as to why this is so in two small incidents occurring in Malta this year. These illustrate the forma mentis of the Maltese “authorities”.

The first example is associated with the fireworks factory at Iż-Żebbiegħ. After 30 years in Court the rural community of iż-Żebbiegħ won a civil case as a result of which a permit for a fireworks factory was declared null and void by the Court of Appeal. The government reacted by rushing through Parliament amendments to the Explosives Ordinance. These amendments with approved by Parliament with the full support of the Opposition. As a result, notwithstanding the decision of the Court of Appeal, a permit for the fireworks factory can still be issued.

The second example is still “work in progress”. The Court of Appeal has, in the application of rent legislation, decided that the Antoine de Paule Band Club in Paola was in breach of its lease agreement. As a result the Court of Appeal ordered the eviction of the band club from the premises they leased within four months.

The government reacted by publishing proposed amendments to the Civil Code, as a result of which the eviction ordered by the Court of Appeal will be blocked.

These are two examples of the government reacting to decisions of our Courts of Law by moving the goalposts – with the direct involvement of the Opposition. The public reactions to these two cases have been minimal. Maltese public opinion has become immune to such “cheating” and bending of the rules because this method of operation has become an integral part of the way in which our institutions function. The Opposition is an active collaborator in this exercise that undermines the rule of law in Malta.

Is it therefore reasonable to be surprised if this “cheating” and bending of the rules is applied not just in minor matters but in very serious ones too? Moving the goalposts whenever it is politically expedient is, unfortunately, part of the way in which this country has operated to date. It is certainly anything but democratic and most obviously anything but respectful towards the rule of law.

published in The Malta Independent on Sunday : 20 May 2018

Encouraging the avoidance of paying tax

The issue as to whether or not  Malta is a tax haven has been brought to the fore once again, as a result of the amendment to the Panama Papers Inquiry Report discussed in the European Parliament earlier this week. The defeated amendment would have seen Malta, Luxembourg, Ireland and the Netherlands labelled by the European Parliament as “tax havens”.

The matter is much more complex. On the one hand it involves tax competition and on the other hand it is a matter of justice in taxation matters.

As has been repeatedly stated, competition on taxation matters is one of the few areas in which small, as well as peripheral, countries in the European Union have a competitive advantage. Alternattiva Demokratika-The Green Party is not in favour of loosing this competitive advantage through tax harmonisation in the EU. However, it has to be used in a responsible manner.

The rules permitting the refund of a substantial amount of tax paid by foreign-owned companies based in Malta is one of the main reasons for the current spotlight. This substantial tax refund effectively reduces the tax paid by such companies from 35% to five per cent and is obviously considered very attractive by a number of companies. The basic question that requires a clear answer is how many of these companies are letter-box companies, that is companies which do not have any part of their operations on Maltese soil?

It would be reasonable to encourage companies to base part of their operations in Malta and, as a result, make use of tax advantages. But in respect of those companies which have not moved any part of their operations to Malta, making use of beneficial taxation arrangements is unreasonable and unjust. It leads to such companies avoiding paying tax in the countries in which they create their profits and consequently avoiding their social responsibilities on paying taxes in the countries that are providing them with the very facilities which make it possible for them to create their wealth.

In a nutshell, Malta is providing these companies with the legal framework to avoid their taxation responsibilities in the countries in which they operate through payment of a fraction of these taxes to the Maltese Exchequer. They pocket the rest.

Hiding behind the EU unanimity rule on tax issues will not get us anywhere, as Ireland has learnt in the Apple case. At the end of the day, the situation is not just about  taxation: it also involves competition rules and rules regulating state aid, as the legal infrastructure encouraging the avoidance of taxation is, in effect, a mechanism for state aid. The is also an issue of tax justice, as a result of which tax should be paid where the profits are generated.

Tax competition has a role to play as an important tool that small and peripheral countries in the EU have at their disposal. No one should expect these countries, Malta included, to throw away the small advantage they have, but it should be clear that this should be used responsibly and in no way should it buttress the urge of multinationals to circumvent the national taxation system in the country where their profits are generated.

Profits should be taxed where they are actually generated and not elsewhere. The EU needs to end – once and for all – not only tax evasion but also tax avoidance resulting from loopholes in national taxation rules. For this to happen, the EU member states must not only be vigilant, but they must also refrain from encouraging tax avoidance through the creation of more loopholes.

Tackling tax evasion and tax avoidance seriously will mean that taxes are paid where they are due, thereby funding the services and infrastructure that is required in a modern, civilised society. This can only happen if more companies pay their dues.

Tax competition need not be a race to the bottom.

published in The Malta Independent on Sunday : 17 December 2017

Tax avoidance: does Malta play a role?

On 30 August, the European Union, through Competition Commissioner Margrethe Vestager, ordered Apple Corporation to pay €13 billion in unpaid taxes to the Irish state.  The EU ruling considered that the special tax treatment of Apple, whose tax bill was substantially reduced, amounted to unlawful state aid.

In November 2014, through Luxleaks, we learnt of tax avoidance schemes in Luxembourg and elsewhere, as a result of which billions of euros in tax were being avoided by multinational corporations.

The EU has subsequently launched various investigations into the favourable tax treatment which Luxembourg, The Netherlands and Belgium have granted to various multinationals.

As a contribution to the on-going debate on tax avoidance in the EU, the Green Group in the European Parliament has recently published a study on the tax avoidance strategies adopted by the industrial giant BASF, the largest chemical company in the world.

Founded in 1865, BASF has its headquarters in Ludwigshafen, Germany, from where it manages a €70.4 billion turnover with production sites in 80 countries.

Malta features in this report together with Belgium, the Netherlands and Switzerland.

Over the years, BASF has used mismatches in national tax systems in order to avoid paying its taxes. It is estimated that, over a five-year period spanning 2010 to 2014, BASF avoided the payment of close to one billion euros in taxes.

Chapter VIII of the report, published by the Green Group in the European Parliament, deals with Malta. It refers to the existence of a BASF subsidiary in Malta which held €5.07 billion in assets. These assets where transferred to a new German subsidiary, BASF Finance Malta GMBH, which was managed from an office in St Julian’s, thereby creating the eligibility for preferential tax treatment which could amount to as much as a refund of six-sevenths of all tax payable in Malta.

All this is a clearly planned movement of profits through generous loopholes as a way of avoiding most of, if not all, of the taxation which would be due under normal circumstances.

This abuse of the differences in national tax systems needs to be addressed urgently. As rightly stated by Malta’s Finance Minister Edward Scicluna at a Luxembourg ECOFIN meeting last September, the way forward lies in coordination at an EU level and not in the harmonisation of the national taxation systems, as some EU member states are insisting.

Tax competition has a role to play as an important tool that small and peripheral countries in the EU have at their disposal. No one should expect these countries to throw away the small advantage they have, but it should be clear that this should be used responsibly and in no way should it buttress the urge of multinationals to circumvent the national taxation system where their profits are generated.

Profits should be taxed where they are actually generated and not elsewhere. The EU needs to end – once and for all – not only tax evasion but also tax avoidance resulting from loopholes in national tax rules. For this to happen, the member states must not only be vigilant, but must also refrain from encouraging tax avoidance through the creation of more loopholes.

Tackling tax evasion and tax avoidance seriously will mean that taxes are paid where they are due, thereby funding the services and infrastructure that is required in a modern, civilised society. This can only happen if more companies pay their dues. Tax competition need not be a race to the bottom.

published in The Malta Independent on Sunday – 4 December 2016