Muddled arguments on taxation

Taxation is a serious business, which is why I find the way some politicians are taking liberties with it surprising. It happened twice over the last few days, at the hands of Labour Party leader Joseph Muscat and Finance Minister Tonio Fenech.

Dr Muscat took on board the cause of those who oppose the new speed cameras and the 60 kph limit they will be set to. Disagreement has been expressed by various drivers and also by the Chamber for Small and Medium Enterprises - GRTU. The main thrust has been that the 60 kph limit makes the fine resulting from exceeding that speed nothing less than a tax.

The arguments range from the need to get from point A to point B quickly to the fact that the highest local speed limit is 80 kph. People seem to forget that the 80 kph limit applies to a few roads and that there are other limits, like those set at 35 kph and 50 kph.

If we are honest with ourselves as drivers, we have to admit that we tend to break all the speed limits at one time or another. More importantly we have to recognise that limits are established in the context of the damage or injury that can be done on impact should a vehicle run down a pedestrian or hit another vehicle. The time and distance for brakes to work are also taken into account.

When limits are objected to and broken, at whatever level, we are effectively saying that we do not give a hoot about the safety of others and of ourselves. That is an irresponsible argument. It is also made incorrect by those who say that speeding penalties are a form of taxation, an argument also used by the Labour leader.

A penalty for speeding is not a tax. The driver has every ability not to speed. One speeds because one chooses too. Taxes are different. They are levied by the central (or, elsewhere, also local) authority - taxpayers have no choice but to pay them. If we evade taxes, we break the law.

Those who argue against speed limits and speed cameras do so because they want the right to be irresponsible. If we travel 10 kilometres at a steady 60 kph we do it in 10 minutes. If we drive at a steady 80 kph we do it in 7.5 minutes, a hardly relevant "saving" of 2.5 minutes. Point is, most journeys in Malta tend to average less than 10 kilometres and it is impossible to travel for 10 kilometres locally at a steady 60 or 80 kph. In brief, we attack safety on the road capriciously, not out of any need to do so.

The Minister of Finance, the man responsible for taxation, came out with another ugly beauty. He did so in the context of the raging debate about the imposition of VAT on car imports, on top of a cost which already incorporates a hefty car registration fee. That, most people hold, is a tax on tax. Not so, was Mr Fenech reported as saying: The registration tax is paid by the distributor; the car buyer "only" pays VAT.

I do hope that the minister was not reported correctly. The registration tax is incorporated in the price paid by the buyer - it does not come out of the seller's margin of profit. VAT on it is a tax on tax, no more, no less.

The way the government has handled this issue has not been a symbol of either political honesty or efficiency. One could understand why the government dragged its feet; taxation on car imports represents an important source of revenue for the government of the day. Revenue foregone from one source has got to be made up from another source.

Nevertheless, equity demands that, as in the case of tariffs on water and electricity, it is the user who pays the relevant tax on a good or service. This has nothing to do with redistributing tax revenue to finance those social services that are not covered by the social security contributions.

Taxation is indeed a very serious business. While nobody likes paying taxes, it is important that confusion is not generated about what taxes are and why and how we pay them.