Social Policy Minister Michael Farrugia

A planned scheme whereby property developers would hand over apartments to be used for social housing in settlement of tax arrears has been dropped, the government said.

Social Policy Minister Michael Farrugia told this newspaper the government was no longer in talks with developers and had abandoned the idea.

READ: Waiver on tax arrears in return for property

“The negotiations have been overtaken by events, and we are not discussing such proposals any longer,” Dr Farrugia said.

“Since then, we have started a programme of building new social housing units in various areas of the island to meet the demand,” he noted

The Sunday Times of Malta reported last October that property owners, notably contractors, were being offered the opportunity to swap unsold housing units in settlement of income tax and VAT arrears.

The negotiations have been overtaken by events, and we are not discussing such proposals any longer

Dr Farrugia said at the time that a preliminary agreement had already been reached with the Tal-Ħerba Construction Group of Birkirkara for a swap involving more than 100 units.

The deal was awaiting the approval of the Finance Ministry, he pointed out.

However, Finance Minister Edward Scicluna said he was unaware of the deal. It later transpired that top civil servants at his ministry, particularly the permanent secretary, were advising not to proceed with the deal, deeming it to be a dangerous precedent.

The talks with Tal-Ħerba Construction Group were being facilitated by Brian Tonna of Nexia BT, the adviser to Minister Within the Office of the Prime Minister Konrad Mizzi and the Prime Minister’s chief of staff, Keith Schembri, when they opened secret companies in Panama.

Prof. Scicluna has just announced that applications will start being received this week for a partial settlement of overdue payments by the government to various categories of the public sector, including the police for the payment of overtime, and employees of former State entities.

He said that, as announced in the last Budget, the government had allocated €8 million to be disbursed this year and promised that similar amounts would be budgeted on an annual basis.

ivan.camilleri@timesofmalta.com