Opposition spokesman on justice José Herrera has claimed that the way the government was imposing administrative fines and interest on unpaid VAT and income tax dues amounted to a form of usury. Moreover, he said, certain administrative fines were unfair.
Speaking during the debate in second reading of the Bill amending various laws, Dr Herrera said it was unacceptable that interest was also being charged for the period during which legal counsel negotiated with the government on behalf of clients on the amount to be paid. He suggested that during such a period there should be a moratorium. The government should deal with these cases in a more humane approach and greater caution.
During the last three years, 158 persons were imprisoned for periods of between six months and a year for not having filed their VAT returns. Some were illiterate and, therefore, unaware of the procedures. While in prison, those who were still unaware of the procedures were handed down prison sentences once again.
The Labour MP suggested that the government should pardon genuine defaulters who had came into line. At present, no pardons were given. This residual power should be used with caution and the President of Malta, on the advice of the government, should intervene.
After Eddie Fenech Adami’s term as President, the government empowered the presiding magistrate to grant pardons. However, the law was flawed since the magistrate could only act if the VAT commissioner did not object. Therefore, Dr Herrera said, it was the VAT commissioner who held the discretionary power. Magistrate Doreen Vella Clarke had her hands tied and this meant that it was the prosecutor who could decide whether or not the defaulter should be pardoned.
Indeed, the magistrate had never granted a pardon since the VAT commissioner had never shown pity towards individuals in what Dr Herrera described as “human tragedies”.
The amendment also provided that if a person did pay his VAT contributions on time but paid them within seven days, he would not pay interest. Dr Herrera argued that letters addressed to the VAT commissioner were never replied to. Bureaucracy meant that one could not communicate with the public administration.
Dr Herrera praised the government for seeking House approval to amend existing legislating and for not enacting ad-hoc regulations, even if the Bill was a hotchpotch of unrelated laws. The Select Committee for the Re-Codification and Consolidation of Laws was indeed seeking to amalgamate similar laws into one code.
He referred to the amendments raising fines for defaulting taxi drivers to €10,000 and said he agreed with the amendment stating that if one was found guilty twice for the same offence, one could forfeit the licence temporarily or permanently and could also be sentenced to one year’s imprisonment.
Dr Herrera criticised the amendment to legislation with regards the Malta Resources Authority, saying the minister could have re-organised the authority without going before Parliament.
He also agreed with the amendment to the Local Councils Act which said that the absence of the mayor and the deputy mayor, the most senior councillor would chair the meeting. Such simple procedure was beneficial since it would resolve disputes.
While the Bill provided for five regions, Dr Herrera said that the opposition would have liked to see Gozo being considered as a region.
Earlier Charles Mangion (PL) said that, while local councils played a very important role, certain councils did not live up to expectations. They remained passive with regard to educational measures and thus there was little social development.
If one considered regions, one could benefit from economies of scale and thus services would cost less. Since local councils were financed by public funds, developing regions would render them more efficient when providing services to the community.
While certain councils tried to set up their own library, if a group of councils coordinated a central library, there would be a more comprehensive service.
In 1996, the then Labour government had implemented a strategy to set up regions. Several councils had participated and common problems were identified. Moreover, the government was able to determine how it would tackle such problems on a national level.
Speaking on VAT returns electronically, Dr Mangion said one should analyse the “leakages” that were present in the system. The government should ensure that what was owed in taxes was collected.
It was impossible not to collect taxes since the government was responsible to provide education, pensions and other social benefits.
While the government should ensure that VAT does not increase, it should also seek to improve its efficiency. The electronic element should include the transfer of payment at the time of inputting the returns because otherwise this would create even more problems.
Turning to the Malta Resources Authority, Dr Mangion said that increasing directorates in existing authorities might result in developing more structures within the same structure. Public authorities needed to be efficient and, therefore, should remain focused on their targets. “There should be no internal empire in such structures,” he said.
While many agreed to cut bureaucracy, one had to implement measures to reduce it.
The amendment to the Employment and Industrial Relations Act would enable the minister to appoint officials to ensure that the law was abided by.
Dr Mangion said that part- time work was increasing, becoming even the primary source of employment for some. There was low employment participation. Meanwhile, certain jobs were precarious, where employees were exploited, having no right to leave or sick leave. Such amendment should tackle this scenario and not let things be as they were.
While employees should be multi-skilled, they should also enjoy their rights. Dr Mangion encouraged the ETC and the minister to be serious and not to speak of measures only. Legislation was not a wishlist; it should be practical to assure rights to the employers while ensuring that their responsibilities were carried out in a responsible way.