Malta has one of the worst black economies in eurozone

Steve Sant

Oct 17th 2011, 19:44

Let me tell you where 90% of the black, grey or shadow economy is; buying out for 'tax free' the tenants from the old rent law system. Millions, if not hundreds of millions are paid out to tenants which monies are totally undeclared income from large dilapidated properties in the 1935 rent regulation ACT. After renting these properties for many years (even 50 to 70 years) for next to nothing in rent, they then ask for a kings ransom to vacate the property. That's our black economy, EU please note.

lilly vella

Oct 17th 2011, 14:02

As if anyone could be surprised at this news. Do not tell us what is black and 'blue' !!! Please tell us what is white and pristine. That would be news to us !

Mr Eric Gahn

Oct 17th 2011, 13:51

Why does an EU study show only 17 of 27 countries? Do teh rest deal in conkers and sea-shells and are therfore exempt from the studies and statistics? Or is it that I am somehow subsidising thier sea-shells?

Mark Cassar

Oct 17th 2011, 03:31

QUOTE A mere 10 per cent tax proceeds from the black economy would result in an additional €160 million into the Maltese national coffers – enough to considerably slash the deficit and debt.UNQUOTE. The solution to our financial quagmire is clear; it's just that it is not to everyone's liking - especially those 'professions' that stand to lose if everyone starts asking for a fiscal receipt, and there are those that are advocating the exact opposite. The point is we are still paying for the rampant tax evasion; by having higher taxes - income tax (for those that declare and what they declare is their REAL income), VAT and the multitude of other taxes. It seems greed - whether corporate or personal - is the common factor and may well drag us, the Europe Union and a large part of the Westernised world into financial ruin. Figure out who will be left. We need to wake up to the reality of what is happening sooner rather than later.

Mr Emanuel Farrugia

Oct 16th 2011, 19:48

"Measures can be taken to lower illegal economic activity and Malta can definitely do more in this direction".

Onor. Ministru Fenech importanti li lil poplu tghidlu fejn hu abjad abjad, u fejn hu iswed iswed u tkomplix tipprova tghaddi lic-cittadini biz-zmien. Taf li qeghdin nghixu fl-2011?

Emanuel Farrugia former Executive Secretary Mtarfa Local Council

Edward Mallia

Oct 16th 2011, 19:36

Interesting figures. So if on the €1.6 billion we have a 10% tax, we will rake in €160 million per annum.
Over 20years that works out to €3.2 billion which is about 10 times the extra expense incurred over 20 years by using gasoil rather than HFO at the Delimara extension. With the recent addition of 1600 civil servants (300 net actually) government should have little trouble in squeezing the black economy sufficiently, with lots of cash to spare. What about it Mr. Fenech?

H. J. Grech

Oct 16th 2011, 18:06

I know that a lot of people will disagree with me about this but it is a fact, which economists agree with, that black economy gives the individual more purchasing power. Normally, there is a 60-70% chance that extra cash is spent, thus paying sales tax or VAT to the state.

John J Borg

Oct 16th 2011, 17:21

cant see why the eu wants to take care of the black economy as well.....they have been taking (are supposed) of the real economy and its in a complete mess........good or bad its an economy that is not illegal.......

Mr ALAN GALEA

Oct 16th 2011, 17:12

No need to be a professor to understand the above statistics. The countries with a high standard of living,
are the ones with the least shadow economy.
Mela ikollok hanut, iddawwar € 30,000 u jekk tiddikjara kollox, tispicca b' xi € 17,0000. Jaqbillek tmur tahdem man-nies, bil-leave,sick,maternity etc etc. U mela toqghod skajv tieghek innifsek.

Carmel Zammit

Oct 16th 2011, 15:43

Whoever compiled this information must have certainly not visited Greece. Tax evasion is so widespread there that one feels itchy every time a fiscal receipt is denied and this is the norm in all purchases. My experience in Greece in this regard makes me overwhelmingly reluctant to return.

Monica Muscat

Oct 16th 2011, 15:26

I think the Government knows well enought where the black economy in Malta is mostly present: Home help/cleaners (fattigi); those claiming unemployment benefit; those working undeclared overtime; and many others, who, although openly employed, are forced to work in the black, under the threat that they will be "sent on their way" if they register their employment.

I think each category requires adequate investigation and a different course of action.

Another long job for the administration.

Bertrand Malley

Oct 16th 2011, 14:57

It would also be extremely interesting to have a Malta / Gozo divide in producing this statistic.

Whenever I am in Gozo I have never - not once - managed to get a VAT receipt for anything, even if I ask for it. They just tell you that to get a receipt you have to pay more. Then you report them to the VAT Department and they do absolutely nothing.

And here I am paying 35% off my income to sustain these leeches who, to add insult to injury, get all the benefits under the sun.

The truth is that there is no political will to solve this problem. If there had been we'd find out how rich the Gozitans really are.

j brincat

Oct 16th 2011, 14:00

Local economists all agree (indiscreetly and not) that it is this black economy which makes our economy thick.

Not that I agree with this cause I have been fleeced from paying taxes where due - but this is the fact of life!
And then I do not care from other countries. Just look at ALL our surrounding neighbours and see how much they love us when it comes to oil drilling.

For me charity will ALWAYS begin at home.

(jb)

Phil Humphries

Oct 16th 2011, 13:27

It's a pity this study didn't investigate how far up the social ladder this practice extends ?

DR EMMANUEL BEZZINA,MA,MAG.JUR.[EU Law],LL.D.,

Oct 16th 2011, 12:00

Were it not for this BLACK ECONOMY, MALTA & THE MALTESE would not survive - this country will not become the sole domain of the Corporate Greed that is engulfing us, so the Maltese use their heads and survive !!

Mr Oliver Cini

Oct 16th 2011, 11:42

from my perspective you all are saying about workers but I fell that our black economy is not only based from work jobs but also the service economy since you get it cheaper with the same value. Even our miniter said in parlament he had work done with out paying vat.

From onther point of view there is the second hand market by which is getting faster and faster and that would be considerd as black economy since money are changing hands. there are many reasons why the black economy is rising one of this is the the ammount of extra value of charging.

Just my toughts

MALCOLM SEYCHELL

Oct 16th 2011, 11:37

I am not surprised at all.

When you have a left wing government who imposes taxes on people who work and promote social services for those who claim that they do nothing this is the result you get.

Sandro Pace

Oct 16th 2011, 11:20

The EU hitted the nail on the head. But before the government dare to squeeze more from the numerous middle-class, even the 'rich' are part of this black economy. My impressions are that these get away with evasion and perhaps utility bills cause they have a blackmailing power of employing people.

If this is so, our govts. should at least collect what is due from this class of people, against which I have nothing, as long as everyone carry his due burden. They say they'll throw people out, but they wont. In France, England and Italy, they have increased corporate taxes. A little decrease in profit margin is not a matter of bread and butter as much as a decrease in the spending power of a salaried worker. It's not billboards that win elections, but spending power in the hands of the numerous.

Henry S. Pace

Oct 16th 2011, 11:10

Its about time to come up with this discovery. Some Business dare to ask you wether your are paying with VAT or no Vat at all. Receipts are not given for every payment. This is across the Board, form Profesionals Doctors Lawyers and you name them all,This gose down to all service providers.

Mr R.E. Saliba

Oct 16th 2011, 10:55

Is there a parallel with the level of tax burdens vis-a-vis wages?
Dik ghidli.

There is not justifying tax evasion, but one may argue a relationship.

debbie Voss

Oct 16th 2011, 10:28

if the EU was a serious organisation it would have held the goverment responsable for the shadow economy because EVERYBODY knows (including the ministers in charge) whose employing people without their workbook thus saving NI costs, leave and sick leave. Probably this suits the govement because their will be less expenditure on pensions in the future as these poor workers wont get any. If the minister concerned and the ETC want a list of entities just leave a note here. A tip...restaurants...construction...rubbish collectors etc.

Lino Briguglio

Oct 16th 2011, 10:12

In 1989 I wrote a paper on the underground economy in Malta, basing my study on the fact that the Maltese held a very large amount of cash (this is still the case today, in spite of the fact that we are told that the Maltese do not have a lot of money in their pockets). In 1989 I estimated that the underground economy was 25% of GDP, in terms of undeclared value-added. The main question to ask in this regard is “Why do the Maltese people hold so much cash?” One possible ansser is “to conduct business outside the banking audit trail in order to evade tax”

D. A . Agius

Oct 16th 2011, 10:03

That's nice to know. Salaried workers are the ones who actually keep this country's taxes coming in.

Wasn't a crack "Tax Compliance UNit" setup some years ago? Aren't there any VAT inspectors in this country?

Are politicians and their lobbyists the biggest fish around, as popular perception states? On its own, €160 million would fund half the new Power Station.

Jean-Pierre Aquilina

Oct 16th 2011, 10:01

One would expect measures to lower tax evasion high on Government's agenda - at par with debt and deficit reduction. Naturally, it is easier to require honest taxpayers to fork out more money or enjoy lesser benefits than chase the evaders. So I do not expect the black economy to shrink any soon.

Wenzu Vella

Oct 16th 2011, 09:40

Mr Camilleri, it is true that black economies are to be found everywhere but, spare a moment and remember that it was not all that long ago the Maltese Government gave an-amnesty to the VAT evaders.
Tax evading is the very thing that gets governments into trouble because no country is able to function without its tax revenue from the very rich to the very poor.
I live in Australia one of the wealthiest country on the planet and yet we still have to pay our fair share of tax.That is not to say that we are immune of tax evaders, although, since the introduction of the goods and services tax (GST ) this has been curbed some what. Our Tax Office here as we call it have a lot of power and believe me are very diligent when it comes to collecting what is due to them and, I am also happy to say that they are very quick when it comes to issue refunds too.
While we are on the subject of tax evasion I cannot understand why Malta with such a huge sovereign debt is borrowing 700 million euro to give to Greece so Greece can pay some of its debt to the German and French banks.
It would be far better for Greece to default and start from scratch because it would be quicker for its economy to recover without all those extra billions to service and repay. Argentina is an-example they defaulted and within 3 years their economy started to recover at a much faster rate than if they had to service and repay all those extra billions that they would had to borrow.

Jimmy Magro

Oct 16th 2011, 09:11

Much has been promised to reduce the black economy, but it seems the Government has spent more in this respect but the deliverables or key performance indicators have been equal to zero, if not negative.

When VAT was introduced we were promised an analysis of input-output tables in order to reduce tax evasion.

When the Tax Compliance Unit was established we were promised that tax sharks would be identified and made to pay their full tax liability.

Every budget speech we listen to more spin-promises.

The end result we are back to square one. There is no political will to hunt down the sharks. The human resources capacity are kept untrained so that everything goes with the flowing water.

Let the FSS do the trick to collect the taxes as there is no way employees can evade any taxes. But those that drive the big four-wheelers, buy apartments in Portomaso, Tigne and other prime locations from their undeclared income - those are the angels of our economy.

Run a check on who owns property in Gozo and you will find several sharks crossing the Gozo-Malta channel.

The tools are their. It is the GOVERNANCE which is missing.

charles tabone

Oct 16th 2011, 08:55

Yes! Exercise control on ALL building sites and find out how many electricians, plumbers, tile layers etc do their jobs without tendering VAT receipts. I have never received a VAT receipt from my family physican, a handful of consultants, the private hospitals and clinics that I have had to attend in the past 10 years. My expense with these professionals, I assume, is tax evasion. Same with a lawyer whom I had on one particular case. What about car mechanics, sparayers and panel beaters who never issue a VAT receipt? Did anybody get a VAT receipt from a street fruit and vegetable hawker. Has any body ever been to any particular villagfe shop whose cash register is always open to debar VAT registration? What about second-hand car dealers who sell cars just on a transfer of vehicle from one owner to another?. What about whitewashers, painters, plumbers, electricians etc we call for odd jobs in our home? Sopmebody might ask "Why don't you make it clear that you want a VAT receipt?". The answer is simple. What about teachers giving massive private tuitions? The list is too long to enunciate. I sincerely hope that the finance and tax departments take stringent measues to safeguard us honest taxpayers.

Gustav Svensson

Oct 16th 2011, 08:52

The problem in Malta is that there are no effective controls in place that ensure that tax are beeing paid. As a foreigner in Malta I can confirm that l 8 of 10 rents for apartments are paid in cash.. and of course the landloard won't pay tax on that money...

Charles Borg

Oct 16th 2011, 08:41

One very good reason why funding for health care should partially come from point of use rather than from direct or indirect taxation, such a 3 cent increase per litre of petrol. Who doesn't pay for petrol is not paying for health care, the same was the 3% VAT increase a few years back. VAT can be evaded as evidenced by the various uncovered frauds, which probably were only the tip of the iceberg. Are you still wondering what the pterol and VAT hikes have to do with health care? These hikes were meant to pay for our totally free health care system....

... so duck your head in the sand.if you still think that health care is free !!

Charles Micallef

Oct 16th 2011, 08:37

There is no surprise, in Malta topping the list of black economy countries amongst the EU Members States as we live in an Island infested by corruption with only those who are earning a living wage or a pension and are part of the PAYE system that pay their taxes and have to adhere to the tax laws and regulations, the rest are very creative as how to avoid paying taxes, with the biggest joke being the VAT payments, starting from the corrupt collection system that was recently uncovered with God only knows what other scandals are going on in other departments and the public are unaware off.

The problems stems from the corrupt political system, where it has always been a matter of I scratch your back and you scratch mine with for one example most senior jobs being openly given to loyalists of the ruling party. I am 63 yrs of age and it is 20 years since I returned to live in Malta and looking back at the amount of serious scandals that I have seen for such a small Island, I have lost faith in what one terms as Malta being a democracy, democracy is being fair to one and all and not just the chosen few ruling party loyalists!

M Muscat

Oct 16th 2011, 08:30

As if this is something we didn't know! The people that earn most, pay the least in this country. They declare that they earn €10,000 a year when they actually earn €100,000. They live in large villas, own expensive cars and boats and God knows what. They are even entitled for Children allowance and other social security benefits. On the other hand people that earn €14,000-€17,000 a year have to pay a lot of tax and are not entitled to anything. Shame on the authorities for not doing anything about it.

Reno Calleja

Oct 16th 2011, 08:28

I am not surprised at all.

When one considers that crooks who have cheated the VAT department millions of of euros, instaed of being sent to prison, office, are given direct orders from the Prime Minister's office worth hundreds of thousands of euros, what can one expect? No wonder one of them is always seen jesticulating and clapping madly in political gatherings where the Prime Minister speaks. No wonder one of them was involved ine Airport fracas in the eighties when everything was being done to destablise the Labour Government.

Witness. Not one single official or businessman ended up in prison for stealing tens of millions of euros from the tax payer by avoiding to pay VAT. What happened to those officials who were involved? Wha happened to those businessmen who avoided paying VAT? On the other hand if a youhg man steals because he is hungry he ends in prison. These are the real thieves and crooks in Malta.

This the recurrent theme in this administration. Government officials who are caught red handed in curroptuipn are taken before the court who museteriously always end up with a suspended sentence. Instead of making sure that these officials are sidelined, they are given new jobs which gives them an opporutnity to be corrupt again. What about the oficials in Transport Malta? the Privatization unit and so many other other areas. Does one blame john citizen to engage in the black ecomomy when corruption and sleeze is so evident? I am off curse not condoning this behaviour. Off course not.

Charles Micallef

Oct 16th 2011, 08:18

This is no surprise, as we live in an Island infested by corruption with only those who are earning a living wage or a pension and are part of the PAYE system that pay their taxes and have to adhere to the tax laws and regulations, the rest are very creative as to avoid paying taxes, with the biggest joke is VAT payments, starting from the corrupt collection system that was recently uncovered with God only knows what other scandals are going on in other departments and the public are unaware off.

The problems stems from the corrupt political system, where it has always a matter of I scratch your back and you scratch mine with for one example most senior jobs being openly given to loyalists of the ruling party. I am 63 yrs of age and it is 20 years since I returned to live in Malta and looking back at the amount of serious scandals that I have seen for such a small Island, I have lost faith in what one terms as Malta being a democracy!