The resignation of David Thake is a positive step. It takes courage to admit to having acted incorrectly and shoulder the political responsibility for your actions. There are others who should follow in his footsteps. Parliament, as a result would be a much better place.
The fact that the tax misdemeanours of the companies owned by David Thake were revealed through media leaks does not make the case any less serious. It however adds another worrying dimension to the saga: institutional breach of ethics, this time by the tax authorities. The Minister for Finance Clyde Caruana is politically responsible for this. He has to act fast to address the matter.
Registered editors already have a right to request income tax returns of sitting MPs. This right should be extended to VAT returns, not only those submitted personally by sitting MPs but also by companies in which they have a controlling interest. This would do away with selective leaking of damaging tax information which generally targets those who those close to government seek to damage or destroy!
It has been established that the two companies owned by David Thake, namely Vanilla Telecoms Limited and Maltashopper Limited have collected Value Added Tax due on their services and retained the tax collected for a long period of time. His companies, stated David Thake, had a problem with their cash flow and thus they were not in a position to pay up the taxes they had collected.
Vanilla Telecoms Limited owes the exchequer €270,000 while Maltashopper Limited owes another €550,000. This is a substantial sum which has been collected from taxpayers through VAT and includes fines and interest due for non-payment.
There are serious doubts as to whether Thake’s claim that he was simply applying the Covid-19 tax deferral scheme is correct.
Given that most of the pending VAT dues of Thake’s companies date back to substantially before the outbreak of Covid-19 Thake has yet to explain as to why it took him so much time to address the cash flow problems of his companies. He has shed too many crocodile tears in emphasising that faced with cash flow problems he opted to pay his employees rather than the VAT office. His delay in acting to address his cash flow problems has the specific consequence of endangering the livelihood of the very employees, which he is so keen to protect!
It is not correct to describe David Thake as a tax evader. It is unfair to compare him to Bernard Grech, his party leader, who was investigated for tax evasion over the years and opted to pay up on the eve of the PN leadership contest.
In view of the fact that Thake’s companies have yet to submit their accounts it is not yet clear as to the actual cause of his cashflow problems.
The point at issue is whether it is right for David Thake to bankroll his companies through the taxes they have collected as economic operators. The fact that there are others who do likewise, and maybe worse, is no consolation! He was a member of parliament elected on a good governance platform. The mismatch between his behaviour and his stated beliefs cannot be clearer than this. This is no minor administrative omission as David Thake emphasised when he announced his resignation.
Its fine to preach good governance. Putting this into practice is a completely different matter. Thake’s resignation, even though he took some time to decide that he should resign, puts some sense back into local politics. Thake’s resignation is a positive contribution to improve standards. Ian Castaldi Paris and Rosianne Cutajar should be next.
published in The Malta Independent on Sunday: 16 January 2022