Aces and jokers

Are we into the last 12 months of this government's life, as some straws in the wind and various political observers suggest? The question posits a timeframe that may be tight, but not by much. The man who shapes the frame is the prime minister, who in turn will have to take into account and respond to circumstances and events.

Recently he has been interpreted to be pointing to a multiple resort to the electorate in 2003, with a referendum followed in a few months' time by a general election. Irrespective of the referendum, the government is into the final third of its term. If the one-year timeframe is too tight, there are no more than six months or so to add to it.

The parties are already oiling their electoral machines, never allowed to go rusty, anyway. They will soon have to start spelling out their future plans, whether they do or do not include anything that is new. That is why, apart from the intrinsic qualities of the man himself and his senior political position, the interview by The Times on Monday with the deputy leader of the Labour Party was probably more carefully sifted than usual. The interview was followed by election-relevant references from the Labour leader to the Value-Added Tax in his Times column on Wednesday.

In the interview Dr George Vella was forthright, as he always is. He was that too, without seeking refuge under the "that's hypothetical" excuse, about the main area still beyond the horizon that did feature in the interview. It covered what will be the man's position should a general election return a Nationalist government, with a platform for membership of the European Union.

The reply gave The Times a front-page story: "After (sic) a pro-EU general election result George Vella would not campaign against membership". ('After' implies a foregone conclusion. No such thing is on the cards.) It has also led to some members of the diplomatic corps wondering whether the reply reflected an underlying rehearsal at the top of the Labour leadership.

I would say not at all. George Vella is an out-and-out politician, but he is not a man who would act as a carrier pigeon. If he had a political message to deliver, he would deliver it as befits the position he holds, and his own self-respect. The point at issue becomes abundantly clear to anyone who reads the interview in detail.

Dr Vella was reiterating the Labour view that the government was not giving the electorate balanced information about the EU to make possible an objective decision about membership or some form of relationship that excludes, or does not include, membership. The interviewer nipped in to ask whether the interviewee was saying that "once (sic) we joined, the situation would be irreversible."

"I am speaking on behalf of George Vella now," was the reply. "This is a personal opinion. I will accept the result of the coming general election." The interviewer was not satisfied with the unequivocal tone. He dug in again, but more precisely.

"So you are saying that if the people in the general election decide in favour of membership, you will accept that decision?"

The honest reply that followed will be quoted time and again. It will probably also be spun off the firm anchor that Dr Vella tied it to. He was clear in his personal commitment that "if, objectively, in the coming election the people will decide to favour membership, I would say good luck to them. I do not intend to engage in a campaign to pull Malta out of the EU if the people would have decided - in the general election - in favour of membership. If the MLP would have people at its helm who would advocate such an approach, then it would be up to them. Once the people decide, you cannot play around with these things."

That declared, Dr Vella called again for a clean decision-making process. That was the anchor.

It was a carefully premised personal statement, yes. But who would commit otherwise? Democracy is about freely taken decisions. The lawmakers have not decided on a binding referendum, but a general election binds. There are constitutional safeguards against corrupt practices, such as moral coercion, but not just that. But the Constitution is not enough. It is more than time to lower the heat of the campaign about Malta's relationship with the EU.

If the parties will be political and partisan, the government as such should step back from partisan politicising. The Prime Minister, in particular, even if he refuses to become a statesman, should act more in that role than as partisan leader. He should talk about national policy in a proper national forum, not in his party's clubs.

As for the Malta-EU Information Centre, it would do well to rise much higher above the fray. It does give a lot of objective information. At times, though, it has fallen into polemicising unnecessarily. It is a fact that MIC is paid out of the people's money. It is a further fact that the people are divided.

Democracy requires that it is the government that spends to put forward its policies. But there is implicit agreement that the people have yet to give their decision on the policy to be followed with regard to the EU - that is, whether to join the EU, under the final package of conditions, or not to join and seek a bilateral relationship beyond that to which the 30-year-old association agreement had led us.

MIC would serve the country more if it paused to rethink how best to inform the people, as flatly and objectively as can be, what EU is, what is going on, what other relationships exist with it. Perhaps it has done much of that. It has also, unfortunately, become part of perceived or actual controversy. The last thing MIC officials should do is to engage in exchanges in the media. The best thing it can do is to give all the uncoloured facts.

What, then, of the Value-Added Tax? Revisiting the subject on Wednesday Labour leader Alfred Sant opined that since the introduction of the tax in 1995, many people in self-employment began to feel they had become the children of a lesser god. With VAT, he said, came a decline in the fortunes of local business. "Whether there was a causal connection or not, some future impartial academic analyst will have to determine," he wrote. "But it happened."

While Dr Sant does not assert that VAT causes business to decline, he went on to say that the 1996-98 Labour administration replaced VAT "by a less onerous consumption tax". He also claimed that VAT is subject to a higher evasion rate than any other tax, including income tax. Such statements do not flow in vain from the pen of anyone in politics, let alone the head of the alternative government.

Their implication is clear. A Labour government would review the indirect tax system. If it retained the VAT structure it would revise it to make it less easy to evade, and it would reduce rates to make it lighter on the consumption items on which it is levied. If it did not retain VAT, there would be an unspecified replacement which would incorporate the previous two points, plus whatever.

Though it is in the interest of the economy and society as a whole to have a stable tax structure, it is the right of any government to review the tax system. The intended review would be advised to the people, though not necessarily in full detail, before they vote in a general election. Tax rates are another matter, and may democratically be changed within the lifetime of an administration, in the context of social objectives, economic policy, and the state of the public finances.

While political proposals and decisions are up to the politicians to make and take, they must be subject to public scrutiny, in the context of such facts as can be collected. It is a fact, for instance, that tax evasion exists in any culture or set-up. VAT, properly enforced, is presumed to reduce the area of potential evasion by establishing an audit trail. It is another fact that governments must tax to spend.

Any tax is a burden on the taxpayer. It is not established that the consumption taxes which replaced VAT between 1996-98 were less onerous than VAT. It was a primary objective to replace VAT with an "equivalent" tax in terms of potential revenue from it. Business in general did not suffer lower demand because of VAT, or of its CET replacement. The two systems had largely replaced custom duties. In addition VAT also taxed value added locally.

CET had not as yet done so to the same extent by the time it was itself replaced by VAT 2, but the Labour government had committed itself to the EU to see to it that domestic products were taxed in the same manner as goods imported from the Union, to remove discrimination - for which read advantages to local industry.

Political tacticians always hold their card close to their chest. Eventually, they have to lay them on the table for the people to see them clearly, and to decide on them. A number of cards, including the VAT system, will have to wait for the general election to get much closer before they are revealed.

If the EU insists that, as a member Malta would have to extend VAT to food and medicines, the card game will be a very different affair.

Predictably enough, the Labour leader is waiting for the outcome of Malta's negotiations with the EU before showing his own cards.

That outcome could be the ace up Alfred Sant's sleeve. It could also turn out as the joke without a joker in the Prime Minister's pack.