The article ‘No statistics on wealth’ (October 4), by Carmel Mallia, president of the Alliance of Pensioners Alliances, makes an appeal to the National Statistics Office “to compile some form of statistics about wealth and wealthy persons”.
In economics this is an old ‘chestnut’ to which no real and totally functional answer exists. Far too many people confuse ‘wealth’ with ‘income’. Countries’ national incomes are usually estimated by finance/economics ministries, announced at annual budget speeches and usually adjusted in the subsequent year in financial survey statistics.
Not so with regard to national wealth, or capital. Nobody really knows how ‘rich’ or otherwise are the US, Qatar or even Malta, for that matter. And this for the simple reason that it is close to impossible for any authority to really know, firstly, what individuals, companies and even governments themselves own and, secondly, what is the real worth of that at any point in time.
Thirdly, what will one include in any such hypothetical figures? Real assets only? Disregard money, bank holdings, company shares, private debts, etc, that is, all of which represent merely transfer debts and will, thus, not affect the wealth of the community as a whole?
And what about foreign debts or credits?
Defining wealth can be as difficult or easy a task as one may try to make it out to be
Thankfully, our national statisticians have always been wise enough not to ever even consider attempting such a next-to-impossible exercise. The only thing that has ever happened in this country which, albeit remotely, might be considered as having been an approach at knowing what taxpayers (notice, not the country) own was the requirement of several years ago (now, fortunately, no longer the case) to submit a capital assets return along with the annual income tax return.
Having said that, the APA is right in its stance that social justice only happens when income, not wealth, is emphatically redistributed. If, as my colleague Philip Von Brockdorff argues, there is under-reporting of what the upper income categories are earning then this skews the threshold for poverty downwards.
The NSO publishing statistics about wealth and wealthy people, as the APA is requesting, will, I’m afraid, not be of much help towards readjusting income disparity and moving towards a fairer society.
My own feeling is that the statistics between the factually existing big disparity between the incomes (not the wealth) of the rich and poor (even as overall incomes have, in reality, increased) will only be impacted if harder fiscal investigation is carried out of certain categories of the population.
The list is easy to compile: the self-employed, the professional categories, conspicuous consumption persons, acquirers of certain types of properties, VATable operators who fall behind in the regular submission of their returns and others.
It is these, et simila, who simply must become targets of harder and more forceful enquiry by the national fiscal authorities which, it perhaps needs to be added, badly seem to be in need of more resources if they can really both come up-to-date in acute backlogs of work as well as attacking much of the evasion that is taking place.
The APA, too, will not really get far if there were to be some silly attempt to “have a definition of wealth and the resources one should have to be considered as a wealthy person”, as the article mentioned above suggests.
Defining wealth can be as difficult or easy a task as one may try to make it out to be. But hitting at this now long ridiculous mantra about ‘tax evasion’ or ‘tax avoidance’ in much more forceful manner will, yes, go some way towards more social equity.
John Consiglio teaches economics at the University of Malta.