VAT: Government should shoulder responsibility - Labour

The Labour Party this morning called on the government to shoulder political responsibility for the inefficiencies in the VAT Department.

Speaking at a press conference, PL environment spokesman (and former finance minister) Leo Brincat said that two main points had emerged from the audit report tabled in Parliament on Monday. The first was that Finance Minister Tonio Fenech had delayed publication of the five-page report by 15 months and, secondly, the VAT Department in its reaction, had said it had been sending regular reports to the government on the situation.

This, Mr Brincat said, was either a case of negligence by the government, or complicity, by not doing anything to address the situation.

Mr Brincat asked whether the management at the VAT Department had been granted a performance bonus while inefficiency and fraud were taking place.

It was worrying, he said, that the audit report showed a serious lack of accountability and risk management, that training within the department had decreased drastically, and that the VAT inspectors were doing other jobs.

He asked whether the recommendations of the report had been implemented.

Mr Brincat said the Finance Minister needed to explain why he had delayed the publication of the report, noting that the VAT Department's reaction was not dated.

He said the audit report made reference to another report by KPMG, which report had not been published.

Karmenu Vella, Labour's finance spokesman, said the audit report raised questions and concerns. Huge delays in refund payments were a source of concern. It seemed that some people people were granted refunds before others. Also worrying was how companies were being deregistered.

Furthermore, some 11% of due VAT was not being collected. This may not be fraud, but it could reflect inefficiency and lack of planning.

He was sue, Mr Vella said, that inefficiency int he collection of VAT was even higher than the €2m lost to fraud.

All of this, he said, had taken place under the noses of the prime minister and the minister of finance, and they should assume responsibility.