In today's world, where all actual and imagined needs are available, it can be safely assumed that nobody is prepared to part easily with his earned or unearned income to pay taxes. If this selfish attitude is counterbalanced with the need of security, protection and the use of common facilities that are provided by Government through street lighting, good roads, education, protection of the environment and welfare benefits, besides a whole range of other services, then people accept that they have to contribute to their costs.

The questions to ask are whether or not Government is actually providing these services as expected and this leads to the next point - whether the level of taxation is just. A further bone of contention relates to the fact of whether the exchequer is managing taxpayers' money in a scrupulous way and spending it for the people's general benefit.

The higher the tax level, the greater evasion and tax avoidance tend to be. In addition, if taxes are considered to be unduly high, more people start to question Government's spending policy and they are more likely to complain of the lack of accountability when abuses in social services payments come to light.

Irrespective of different tax regimes, taxation has become an important item in politics. People interested in public office make it a point to declare that they do not intend to raise further taxes; common catchphrases are that money should be kept in people's pockets for them to spend in any way they want and to pass their wealth on to their children.

As a result, the tendency in many countries is for governments to refrain from imposing further taxes wherever possible. Governments attempt to keep expenditure to a minimum by outsourcing many of their functions that are allocated to the private sector.

Thereby, revenue needed to equate with expenditure is not too high. This policy has also been adopted as a result of a correlation between lower taxation levels and higher economic growth.

As the administration has to be maintained and public services have to be provided, taxation is always required to meet the costs involved. One could argue about the optimum size of the administration and the quantum of public services provided and question whether these are all actually needed. It is possible that they are just serving political exigencies.

Consequently, here we have a potential divergence between the taxpaying public and the government. Through proper accountability and complete transparency by the governing bodies, the public might not regard paying taxes as a burden but as a blessing because everybody understands that the hard-earned income contributed to Government is not irresponsibly frittered.

Moreover, people and governments must have a social conscience. Gone are the practices of the Roman authorities when taxes were levied to enrich the governing classes and answer the needs of their vast armies. In our age, governments employ taxes both for the creation of national wealth and to redistribute the total income generated in the most equitable way. The implication is that taxes have to be progressive: those who can afford should pay more than those who have less.

To be successful in this venture modern governments must not fall into the trap indicated by Arthur Jones in his book Capitalism and Christians when he wrote: "The economy of the nation where capitalism has had its greatest successes is in an unanticipated time of doldrums and decay. No one in public life has the ghost of a notion about how to restore confidence in the market, and various stop-gap proposals (a tax break for the middle class, a relaxation of the capital gains tax for the wealthy) are widely acknowledged as offering little or no help in the long run."

What the late British Archbishop William Temple stated in his book Christianity and Social Order still applies today even though it was written during World War II:

"We all know that politics is largely a contention between different groups of self-interest - e.g. the haves and the have-nots. It may be the function of the Church to lead people to a purely disinterested virtue (though this is at least debatable); a statesman who supposes that a mass of citizens can be governed without appeal to their self-interest is living in a dreamland and is a public menace. The art of government, in fact, is the art of so ordering life that self-interest prompts what justice demands."

Justice is the frame of political solidarity. Beyond safeguarding the minimal conditions for community embodied in civil and economic rights, justice calls us to enhance the power of all to participate fully in the productive life of society.

More than ever before, political solidarity is also a crucial factor in today's interdependent world. These features grow out of a lively sense of one's dependence on the national wealth and obligations arising out of it. Solidarity is another name for this social interaction and civic commitments that make human moral and economic life possible.

Approached in this way, taxation is just a balance between being a burden and a blessing. Taxpayers' civic sense prompts them to part with their income to help those who are really in need and are unable to procure their needs themselves.

If Government's sense of responsibility is shown in its practices of accountability and transparency, it is likely to put taxpayers' minds at rest as they perceive that their contribution is handled prudently and scrupulously.

But one has to differentiate between what should be done and what is actually put into effect. It is debatable whether these practices prevail in Malta. It is common knowledge that tax evasion and avoidance exist. In fact, when Government decided to lower income tax brackets from 65% to 35%, more revenue was collected, indicating that there had been both tax evasion and tax avoidance.

The newly-created Tax Compliance Unit is doing sterling work in trying to find out those who either evade or avoid tax payment. Now many people are complaining that the 35% is high and, particularly the business sector, are requesting that corporation tax should be lowered to around 25%.

People are prepared to contribute when real needs exist. The hundreds of thousands of liri that are periodically given to philanthropic organisations and charities easily prove people's generosity. But they tend to be sceptical about tax imposition.

Many believe that taxpayers' money is not equitably distributed, and expenditure is not judiciously planned to ensure economic growth and not wisely spent on projects that yield better returns in future.

Some people believe that political exigencies are more important than equitable redistribution of wealth, economic growth and investing for a better future. Worse, the perceived notion is that politicians are more prone to deploy taxpayers' money to employ people from their constituencies in public corporations and authorities. In fact, some people maintain that this is the reason why Government created so many institutions and organisations.

Now government is obsessed with the idea of reducing the public deficit to 3% of GDP as required by EU norms. This may be a good target to achieve because Government will have to pay less service payments.

But, with higher taxation levels, there is the certainty that people's confidence will be adversely affected and investment for future growth will decline. These two factors will tell on Malta's levels of productivity and competitiveness as cost per unit of output will tend to rise. Perhaps a better approach is expenditure restraint and therefore taxing people less.

One has to keep in mind that God created the good of the earth for humanity as a whole and taxation, fairly imposed, should be seen as the money needed to fund aid programmes, develop the national economy and ameliorate the general standard of living of the people. There remains one proviso - that there is no government waste.

Dr Borda is an economist specialising in the economic development of small states.