Editorial
Real scope of Permanent Residents Scheme
The debate on the Permanent Residents Scheme that was suspended late last year raises important issues relating to the real scope of this scheme and the changes when it is reactivated.
The gist of this scheme is to entice wealthy residents to settle in Malta as long-term tourists and thereby help our economy through their expenditure. The purchase or rental of local property is only a part of this scheme, but there is an apparent disagreement between the government and the representatives of the property sector on how important this part of the scheme is.
The Chamber of Commerce appealed to the government to reactivate this scheme after making appropriate changes to the conditions to eliminate any chance of it being abused. The Chamber believes that the economy will benefit from the reactivation of this scheme because “permanent residents put a lot of money in the economy”.
The Minister of Finance was naturally more concerned about the costs of such a scheme if it were to be abused by those seeking to benefit from the free social services that are available to all residents of Malta, be they Maltese or foreigners. Minister Tonio Fenech clearly stated that “the Permanent Residents Scheme was never intended exclusively to sell property”. He also said: “The government’s duty was to take all steps to ensure that the revised scheme would be as foolproof as possible. If it took another month to finalise, it would be time well spent.”
As is normal in such debates, there is more than a grain of truth in both sides of the arguments brought by the interested parties. The local economy undoubtedly still has a significant dependence on the property market that in recent years had to struggle to cope with recessionary forces. The representatives of the property market often appeal to the government to help this sector by promoting schemes that boost demand.
However, many analysts argue that the present problem with the market is not so much lack of demand but oversupply. There are an estimated 10,000 properties that are unoccupied, most of which are available for sale. Should taxpayers’ money be used to cushion the pain that results from a fall in returns for operators in this market who are not seeing the properties on their books selling fast enough?
The Minister of Finance answered this question in a very diplomatic way. While the government is willing to boost demand for property through schemes like the Permanent Residents Scheme, it also has to take into consideration the cost of these schemes to the taxpayers. If, as seems to be the case, the conditions tied to this scheme are too open to abuse, then they should certainly be changed.
Business risk should be borne by investors and not by taxpayers who at present have more than a fair burden on their shoulders. When things go right in business, the owners benefit and this is an important incentive for entrepreneurs to take risks. But when things go wrong for whatever reason the costs of past errors of judgement should not be underwritten by the taxpayer.
The Chamber did, however, make the very valid point that since the government has agreed in principle to reactivate the Permanent Residents Scheme, then this should be done sooner rather than later.
As long as the reactivated scheme safeguards taxpayers’ interests there should be no objection to helping the property sector through this scheme.
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J. Cassar
Apr 2nd 2011, 11:50
The government is not in the business of stimulating property sales so that developers can continue to benefit and be protected from the risks brought about by their own decisons to continue building despite a massive over supply of houses. Taxpayers pay for all the social services provided by the state while permanent residents only start contributing when the come here. On balance this editorial is fair and balanced.
Carmelo Micallef, Valletta
Apr 2nd 2011, 13:04
@J Cassar:
The facts are that Permanent Residents contribute to our tax revenues by each applicant paying a minmum annual tax of 4,192 euro but does not benefit from our social services. The Permanent Resident is duty bound to have health insurance to fully cover themselves and all financially dependent relatives.
It would be helpful if Lawyers expert in this field could confirm the relevant facts.
The Times Editorial should be applauded for its even handed attempt to get the Ministry of Finance to give a firm date as to the lifting of the "temporary suspension" of this scheme with the revised rules to be applied thereafter.
Peter Zammit
Apr 2nd 2011, 15:36
Carmelo Micallef, Valletta seems that you have an interest in the scheme. Then can you tell us how a foreigner permanent resident went tor cancer treatment abroad costing hundreds of thousands of euros and then we were billed for it? We do not need foreigners who come here to enjoy our social and health services for which we have been paying all our lives and when Maltese citizens have been dragged through hell to have cancer treatment when they and their families have always been paying their taxes throughout their lives.
Furthermore I and many others do NOT agree that property in Malta should be bought bu foreigners but only rented so that the property remains in Maltese citizens hands.
It must also be made mandatory that any foreigner who is granted residence permit in Malta must have an insurance or else his residence permit will be revoked and no treatment be accepted to be given at our expense.
Carmelo Micallef, Valletta
Apr 2nd 2011, 18:40
@ Peter Zammit:
Your contempt for facts is very sad.
1 It is not possible for a Permant Resident to benefit from the medical services as you state. I suggest that this is a fabrication. It is a legal obligation of a Permanent Resident to have legally acceptable health insurance for themselves and their financially dependent relatives. What you suggest should be the law is already the law. It is a pity you never made the effort to find out the facts before writing.
2 The right to buy property in Malta is available to any foreign national, without the need for them to have residency status. My personal opinion is the opposite of yours, Permanent Residents should be obligated to purchase properties above a certain level to bring Stamp Duty into the Inland Revenue and help fill some of the many thousands of empty properties that litter Malta. In fact, the option of renting properties to Permanent Residents already exists and is considered by many, myself included, to be a lopp hole that needs closing.
Peter Zammit
Apr 2nd 2011, 22:19
Carmelo Micallef, Valletta then can you explain how this foreign permanent resident billed us for his cancer treatment? Can you explain how many other instances of abuse of our health and social services by these foreign permanent residents were uncovered? I bet you do have an interest in the scheme being re-activated Carmelo. Why don't you tell us what's in it for you?
Carmelo Micallef, Valletta
Apr 3rd 2011, 06:56
@ Peter Zammit:
The so called Permanent Resident you refer to who supposedly billed our Health Service does not exist. It is a fabrication.
Deal with the truth.
Godfrey Camilleri
Apr 2nd 2011, 11:30
The article says: "10,000 unoccupied residences". We have been quoted figures of 40,000 and 50,000! May we know which is the correct figure?!!
Carmelo Micallef, Valletta
Apr 2nd 2011, 13:08
@Godfrey Camilleri:
Please calm down, using 3 exclamation marks in a 23 word contribution signifies a level of hysteria that has nothing to do with this subject or Editorial.
Carmelo Micallef, Valletta
Apr 2nd 2011, 10:34
The Permanent Residence Scheme was designed as a revenue generating policy to bring income into the Republic of Malta which would not otherwise have done so, such revenue generation has ceased completely since the Ministry of Finances arbitary suspension of said scheme.In addition there has been a sad side effect, it is apparent that a number of existing Permanent Residents are feeling uneasy about the suspension in that they are blocked currently by the Ministry from fulfilling their legal obligation to submit financial returns, thus fuelling their unease.
Carmen Pullicino
Apr 2nd 2011, 15:40
Carmelo Micallef most of the revenue ti generated was for the speculators at he expense of the Maltese people who have seen the price of property constantly increased and getting out of their reach. The scheme is to the detriment of Maltese people and only benefits the speculators who are destroying every bit of greenery on Malta to fill their pockets.
Carmelo Micallef, Valletta
Apr 2nd 2011, 18:30
@ Carmen Pullicino:
The Scheme was hoped to bring in high net worth individuals into our society and make a positive financial contribution thereof. The policy as it was allowed for Permanent Residents to pay taxes and duties to the Inland Revenue without any rights to claim any health or social servicers in return. In turn it seems that a foreign national (irrespective of Residency status) can only buy one property in Malta or more than one in a Designated Zone. This seems all positive to Malta.
Carmelo Micallef, Valletta
Apr 2nd 2011, 10:26
Please note the fact that a Permanent Resident was/is obliged by law to have a medical insurance policy to cover themselves and all financially dependent relatives while in Malta. The Permanent Residence Scheme as it existed prior to suspension had no inherent capacity for abuse, contrary to what was stated by the Minister of Finance in response to a Parliamentary question.
Carmelo Micallef, Valletta
Apr 2nd 2011, 11:19
It would be most helpful if Lawyers were to contribute to this discussion by highlighting the legal facts. Thank you
C Cremona
Apr 2nd 2011, 12:41
A lot of these people originate from outside the EU and move here to get gain access to other EU countries unhindered mainly for tax purposes . This scheme was halted because other EU states have objected and the government had no option but to act.
Carmelo Micallef, Valletta
Apr 2nd 2011, 14:48
@ C Cremona:
The Permant Residents Scheme is suspended in totality for both EU and Non-EU persons.
We have heard 'gossip' as to the reasons for suspension but seem to have no facts.
One of the anecdotal reasons doing the rounds is that Non-EU people were using the Permant Residence Permit as a Schengen Visa, but this is not an abuse but an actual right granted under the Scheme.
C Cremona please help us by detailing the specific countries that have pressurised the Govt of Malta to suspend this Scheme>
I have stated elsewhere that it would be helpful for Lawyers with expertise in this field to assist the rest of us by detailling the facts.
Michael Buhagiar
Apr 7th 2011, 15:03
Mr Carmelo Micallef you think you know everything about this PR Scheme. One question you did not answer (being put to you several times) is WHAT'S your real interest in this scheme? And by the way, there was a person (Permanent resident) who billed our government for jumping all the queues at MDH, and went abroad for cancer care and billed our government for thousands of euros. Is that right Mr Micallef? Out of my and our pockets, this foreigner go first class treatment and we paid for this treatment!!! And I'm not hysteric, I'm just mad. and btw, there is a big lobby going on by those who have an interest in filling their pockets out of our miseries and I am quoting from a letter: "we are currently holding a number of meetings with various local government institutions in order to put as much pressure as possible on the Maltese Government so that the new PR regulations are issued as soon as possible". Is this enough to show you the arrogance of those in favour of this obscene scheme which was abused by many a foreigner through the help of maltese lawyers and developers?