Hors d'oeovre and simple arithmetic

By the looks of it, the taxpayer is going to be invited to make a meal out of the general election. The main parties are pitching at his pocket. No sooner had he advised the President to dissolve Parliament that Lawrence Gonzi nimbly stole a march over his opponents. He announced that, should the electorate give him a fresh mandate, his new government would slash income tax beyond recognition. Thereby he set the first part of the electoral agenda, reversing roles, since it had been Opposition leader Alfred Sant who had been doing so for a long time.

Sant had been so successful with the agenda that he created a perception that there would be a general election "soon" from about one year after being thumped in 2003. Now the play-making has turned serious. The Prime Minister confirmed that the election will be held on March 8, five months before his term expires.

He got off the mark with his tax proposal in a manner that created fresh controversy. Like Sant before him when he came out with his scheme to abolish income tax on overtime earnings, Gonzi did not cost his commitment to take thousands of payers out of the tax net. He simply said he would hike up income threshold and more than double the taxable income ceiling.

Sant was quick to point out the obvious: the sums were missing. As a matter of fact, he also took it upon himself to berate journalists for not grilling Gonzi about that little matter. This is one aspect of the Labour leader's studied technique which does not necessarily gain him brownie points. But he sticks to it and, sometimes, it works.

As they had done with Labour's initially uncosted plans on overtime tax and on the declaration that a new Labour government would cut the fuel surcharge by half, the media turned to the Government to demand the obvious.

The answer that issued forth from the usually convincing finance parliamentary secretary, Tonio Fenech, was totally unconvincing. He said that he (obviously) had the details, but wouldn't release them for fear that the MLP would take them on board. He soon - within hours, in fact - had predictable egg on his face.

Gonzi slipped out the Government's estimate of how much further income would be foregone should the slash-and-slash promise be redeemed. The government finances would be hit by Lm20 million annually. But he reiterated Fenech's point that an expected surge in declaration of income would allow the Government to recover the foregone amount in about two years.

That is what happened after the cuts in income tax in 2006 and 2007. That is what the Labour side expects to happen should it be able to exempt overtime from earnings.

The style of playing the game does vary. The essence is pretty much the same. The style will change further to introduce some differentiation.

Soon enough the Nationalists will be pointing out that Gonzi's Lm20 million is a very educated estimate based on the official tax statistics, including revenue raised from each tax band; whereas Labour's commitment to slash the energy surtax cannot be costed, since the price of oil and its derivatives fluctuates and even gyrates daily on the open market.

Expect, then, much stress on the arithmetic of it all, and hang Tonio Fenech's hasty evasion on the ground of copy-catting. The more informed estimates are given, the more transparent and better all round.

But estimates are no more than that, and similarly assumptions about taxpayer and consumer behavioural reactions subsequent to tax cuts and energy tariff reductions, including in the grey area of evasion. If at all possible taxpayers and consumers would love not to pay any income tax or any surcharge at all. The Opposition leader even dangled out the latter possibility.

And a Nationalist Party seeking re-election dangled out the former in 1971, as did the MLP in 2003, partially so with a promise to 'forgive' taxpayers their equivalent of two months' income tax. In each of the latter cases, the party making the promises was not elected.

With both the major parties committing themselves to forego heavy revenue one cannot say that neither will be elected to govern. Alternattiva Demokratika and Azzjoni Nazzjonali may dream of being in a coalition. Their dream is not at all likely to materialise into reality. There will be either a Nationalist or a Labour government. Whoever staffs it, the new government will be committed to cut back revenue, hoping to recover it from resulting growth in activity and a reduced fixation with evasion.

The proof of that pudding will not simply be in the eating, but in how long there would be anything to eat - that is, sustainability.

Hors d'oeuvre, whether red or blue, do not make a whole meal.