Tax scheme aimed to make up for revenue downturn - ministry

The government said today that revenue from the amnesty on penalties on overdue tax would help to make up for the impact of the economic and financial crisis which would see a drop of €60m in the government’s projected revenue.

Reacting to an Opposition statement issued in the morning, the ministry stressed that overdue tax would have to be paid in full, and it was only the penalties which were being reduced.

The amnesty would help those who had fallen back in their tax payments, including those affected by the current economic situation. It would also help the Inland Revenue Department to clear debts which in some cases had been accumulating since the 1980s.

The revenue would help the government invest in safeguarding jobs and the social sector.

The ministry said this amnesty was also in line with reforms in fines and penalties announced in January, when interest was reduced to 0.75% and capping was introduced.

Fines for late filing and omissions were also reduced in January and it therefore made sense to also reduce the fines for previous years.

Earlier, Opposition finance spokesman Charles Mangion called on the government to declare how many people and companies were eligible for the recently-announced amnesty on penalties for overdue tax.

He asked how much the government expected to raise as a result of the amnesty and what the losses in uncollected revenue would amount to.

In a statement, Dr Mangion asked whether the government's decision was a political posture or a sign of financial crisis, with the government having failed to meet its revenue targets.

While it was true that an amnesty could be beneficial to the cashflow of companies, it was clear that the government's decision was based on its financial failures, the Labour spokesman said.

He asked for a breakdown of the categories which would benefit from this amnesty - employees, self-employed and companies. He also asked whether the government agreed that such frequent amnesties could encourage people to delay their tax submissions, to the detriment of honest taxpayers.

He also asked it the amnesty was linked to the PN's pre-election promises.

In a separate statement, Alternattiva Demokratika asked whether the government's proposal to grant amnesties to income tax defaulters was primarily aimed to accommodate certain business interests.

'While incentives for on time payment should be encouraged, the government’s aim should be to collect the actual payments due rather than impose over the top fines, which sometimes make it impossible for even the actual payments due to be honoured," spokesman Michael Briguglio said.

"Methods for paying actual dues should be negotiated and agreed upon between all parties involved. At the same time we think that Government should make sure that businesses which owe hefty amounts to public finance should pay up the fair and proper amounts due."