Editorial

VAT is now here to stay, at last! Most people, even those who were first against this form of indirect taxation, must have realised by now that there is no real alternative to value added tax. But Labour kept its stand against it up to the last minute. Now the wheel has turned a full circle, with Labour announcing on Saturday it planned to retain VAT if returned to power again.

This is by far one of the biggest U-turns made by Labour in recent years. When the Nationalists introduced value added tax in 1995 it had done so in a bid to fight tax evasion. Indeed, this was then seen as a major tool in the drive. But then Labour had come out against VAT and promised to repeal it if it were to win the election.

The general impression given at the time was that cash registers, introduced as part of the system, would be made "redundant" if Labour were to be returned to power. Well, Labour were elected and, true to form, the new government repealed VAT only to come up with a new form of indirect taxation called CET. This was seen by many as more cumbersome than VAT. It had also brought in less revenue to the government than VAT.

Labour's promise to remove VAT was one of the factors that had cost the Nationalists the l996 general election. The electorate had also wanted to try out Alfred Sant. He was seen then as a promising leader, raring to go. But inexperience in administration had spelt the party's downfall from office much sooner that anyone thought. The Sant government did not even last two years.

When it lost its majority in parliament, a new election was called and the electorate put the Nationalists back in power with a much greater majority. In no time, Finance Minister John Dalli reintroduced VAT, but Labour retained its stand and it has taken it four other years to come to a decision. If Labour's promise to remove VAT in the 1996 election was one of the factors that had cost the Nationalists that election, surely the VAT saga has cost Labour much of its credibility.

Labour had really no reasonable alternative other than to accept VAT this time, for how can such a small economy as ours keep on changing its system of indirect taxation from one administration to the next? Labour had only compounded the problem when it chose to drop VAT and introduce CET, but then the move was generally seen to have been taken out of pique though political analysts were more correct in arguing that Labour simply wanted to win the retailers' vote.

They were then, as they are now, also seen to favour the hunters, remember? But the issue over hunting is another matter, although it is also assuming much greater importance than in the past to a growing number of people who are simply tired of the sheer arrogance some of the hunters show at each and every general election.

A Chamber of Commerce survey last summer had confirmed the validity of retaining VAT. As generally expected, Labour's decision to retain VAT has been welcomed by the business organisations - and for good reason too, for instability in such an important subject as taxation creates unnecessary difficulties.