The government's missing hundreds of millions

Just before the Christmas recess the Auditor General presented his report on the Public Accounts for the year ending December 31, 2007. Now that the latest financial figures have been published it would be interesting to ascertain how these figures correlate with those given by the Auditor General.

In the editorial comment of December 20 on the Auditor General's report, The Times rightly points out that "public reaction is so weak that the story repeats itself, in some form or other, time and time again".

This may be due to the fact that little coverage is given in the media to the contents of the report. A report running into some 150 pages of fine print is very often condensed into a very brief summary, running into a few hundred words, based mostly on the Executive Summary. Perhaps the figures just released together with those given below might elicit some further comment. One never knows!

One of the editor's comments, to cite one example, mentions the fact that "the Inland Revenue Department has not submitted its arrears return since 2002 and, according to the Auditor General's report, is not in a position to quantify the amounts due by employers on a yearly and accumulative basis". Still, such a statement does not give the reader a true idea of the extent of the problem relating to arrears of tax due to the Inland Revenue Department - and to other government departments. In actual fact, the Auditor General devotes a whole chapter running into 17 pages (pp.36 -53) with a plethora of figures showing the amount of moneys due to the government which have accumulated over the years.

Of all these arrears, one can mention four sources of revenue which have strikingly fallen into arrears and have accumulated over the years, viz. Income Tax, VAT, TV Licences and VAT. The following figures (extracted from various audit reports) give a rough idea (the exact amounts cannot be ascertained due to lack of relevant information, cfr. Report) of the amounts involved.

Income tax:
as on 31/12/1987 - Lm95,515,587
as on 31/12/2007 - Lm276,337,619

TV licences:
as on 21/12/1987 - Lm1,058,396
as on 31/12/2007 - Lm 2,755,470 (of which) Lm1,105,271 (prescribed)

Fines:
as on 31/12/1987 - Lm 483,717
as on 31/12/2007 - Lm3,897,595 (Superior Courts)

VAT: according to Audit Report for 1995 returns were not submitted. However, the amount of Lm166,530 was reported due i.r.o. the Expenditure Levy
as on 31/12/1997 - Lm 3,472,500
as on 31/12/2007 - Lm120,335,523

Totol arrears:
as on 31/12/1987 - Lm128,218,101
as on 31/12/2007 - Lm80,126,269

Other outstanding arrears running into hundreds of thousands of Maltese liri include rent of government property, duty on documents, customs duties, road licences and social security overpayments.

The report goes into detail as to whether these amounts can be recouped, albeit partially, or ultimately written off. It remains an incontrovertible fact, however, that every single lira (Lm) of the thousands and thousands (actually more than a billion euros) mentioned above was actually due to the government not by some amorphous ghost but individuals or entities each having a legal identity of his/her own.

What happens as a result, or allowed to happen, is that the honest, law-abiding citizen gave, and still gives, to Caesar what is due to Caesar while the others (more clever?) are, presumably, rubbing their hands with glee... Unless they have already been called upon by Peter to give an account for their sins of omission!