I was pleasantly surprised to stumble across what the Minister of Finance had to say regarding Malta’s taxation rate, which is among the lowest in Europe. Apparently, the government’s income from taxes amounted to 34.7 per cent of the gross domestic product against the European average of 37 per cent (timesofmalta.com, February 4). So, although our salaries are admittedly on the lower side, we are paying fewer taxes than our European counterparts. Hence, it is very unfair to allege the government is suffocating the “people” with exorbitant taxation.
Lest I be misunderstood, I am in no way suggesting the government should increase taxation. To the contrary, if Malta’s economy continues to strengthen and grow, I sincerely hope the government will consider reducing our taxes even further.
Until that happens we will have to make do with what we have. And it seems some Maltese manage to do quite a lot. Suffice it to say the government stock issued last month was heavily oversubscribed by the public and institutional investors. And we are not talking peanuts. Every time government stock or corporate bond issuances are on offer the demand is invariably much greater than the supply. This time round it was practically three times as much. Apparently, “the Treasury had received 6,052 applications and/or bids having a total value exceeding €326 million against the authorised sum on issue of €120 million”.
The trust small and large investors are placing in government stocks reflects without a shadow of a doubt a vote of confidence in our economic stability. After all, no one would be crazy enough to invest in a country on the brink of bankruptcy, no?
On the very same day the government stock was swallowed up, February 18, we were regaled with more positive news. HSBC Bank Malta plc reported a profit before tax of €83.1 million, an increase of 16.7 per cent, or €11.9 million, compared to 2009. Believe it or not, customer deposits grew by €376.2 million in 2010 to €4,462.9 million! The bank’s director and chief executive officer, Alan Richards, said the year 2011 would be another challenging year but: “The local economy is performing relatively well and we anticipate continued growth for the foreseeable future. However, challenges within the global economy remain.”
Other banks also seem to be doing well. Last October, the Bank of Valletta Group reported an increase in profits. For the year ending September 30, the bank registered pre-tax profits of €98.9 million, up 21 per cent from the €81.8 million reported in 2009. During the presentation of the detailed review of the year’s performance, bank chairman Roderick Chalmers pointed out that: “Despite strong competition for deposits and government and corporate bond issuance, deposits grew by €419 million (nine per cent) to reach €5.19 billion.”
It is also amazing that, during the global financial meltdown, all this local affluence came to light. Imagine the wealth accumulated if we didn’t have to cope with a plethora of international price hikes. It is indeed extraordinary that, while other European countries are still foundering so badly with their governments taking dire austerity measures to correct past mistakes, Malta is, so far, sailing smoothly towards even greater economic growth.
Having said that, some families may still be struggling to make ends meet and genuinely require financial assistance in their hour of need. But there is no doubt the majority of the Maltese live quite comfortably with well over 70 per cent proudly owning their very own home.
Shopping trends, lifestyles and personal priorities have drastically changed but as our expectations continue to climb higher than ever we risk going totally overboard. The I-want-it-all-and-I-want-it-now syndrome is rearing its ugly head! Thankfully, the majority of us are sensible and content with what we can afford; others unfortunately, to keep up with the Joneses, seem to have dangerously lost sense of balance.
In truth, what was once considered a luxury is now looked upon as a necessity: mobile phones, washing machines and freezers spring to mind. It would be interesting to know how many homes are equipped with other “modern” essentials such as tumble dryers, dishwashers, air conditioners, LCD televisions, sound systems, PlayStations, laptops, iPods, iPads, iPhones, smartphones, HD video camcorders etc. and all the paraphernalia that go with them.
We would all love to travel to exotic places, to own a villa cum swimming pool cum jacuzzi and a high calibre car or cabin cruiser but how many of us can actually afford these extravagances? Besides, in the greater scheme of things, how important are such luxuries compared to our freedom, security and health? Imagining, just for a moment, the pain the people in North Africa are suffering should be enough to jolt us back to reality.
Unfortunately, I have a niggling feeling we are taking all our blessings for granted and as our expectations soar even higher we end up demanding the government hands out more goodies than it can afford. Strangely enough, this tends to happen more so under a Nationalist government and as my son so aptly pointed out: the Maltese people don’t expect much from a Labour government but from a Nationalist one, they expect heaven on earth! And that is the truth of the matter.