Editorial | Wednesday, 11 March 2009

Respecting taxpayers

Now that government strategy in facing the international economic downturn has become clear to all, it has gained the approval of many.
The Finance Minister has taken on board industry players in a specially-appointed task force, and this is laudable. Companies requiring government aid are taken on a case-by-case basis, and no blanket strategy will apply when it comes to hand-outs.
Those companies feeling the pinch are to approach government with an investment plan – offering something in return for prospective state aid – be it in terms of further employment, retention of staff or the promise of earning more: thus of paying more tax. If a firm has bright future prospects in mind, it will be listened to.
Tonio Fenech has made it clear that he has no time for those firms asking for government support simply so they can survive. They must have growth projections. For all that matters, companies without a future may just pack up and leave as far as Fenech is concerned. If truth be told, there isn’t much money government can risk on companies facing relocation or shutdown - with or without state aid.
Fenech has adopted this seemingly stern approach because he wants to ensure that the issue is tackled responsibly – since public funds are there to be protected, and rightly so.
State assistance has been given out to Trelleborg in tax credits – which would not have been collected anyway in the event of relocation, in case government aid would not have been granted.
Sensitivity and sensibility is also being shown on the tourism front. Soon after yesterday’s Ecofin meeting came to a close, the minister immediately said that he was not averse to the idea of applying lower VAT rates for labour intensive services, including restaurants, once the EU allows him this flexibility. It is now hoped that no time is wasted in bringing about this much needed change.
All well and good so far, and government has justifiably earned enough backing in the implementation of its strategy vis-à-vis the world’s current economic woes. One however, cannot stress enough the importance of letting the public enjoy their right to be informed. By refusing to disclose how much money will be spent on Trelleborg for example, Fenech has last week shown yet another shortcoming in basic public relations skills.
The ministry’s intentions to restore confidence may be good, but at times it is how such actions are perceived by the public which end up having a counter-productive effect. Government cannot be expected to be trusted when it’s silent. It is constantly under scrutiny, and if intends getting the support of the public, it must succumb to satisfying the curiosity of taxpayers.
Only now can we safely say that government is working in preparing Malta to weather the storm – and this is because we are informed on what government is doing, even if not in full.
It was not enough to hear ministers say they are doing their best with no further explanation of what is being done.
For a while, however short, government gave the silent treatment to the media when it was asking about the threat the country faced by STMicroelectronics discussing relocation or shut down.
Fenech eventually wrote in newspapers and granted interviews, but even on the record, he refused to present a structured action plan at a proper media event – and he hustified his actions by saying he did not wish to sound alarmist. Instead, he sounded overly positive and lost credibility.
We would have liked to offer our full backing to the tax credits offered to Trelleborg in return to the firm’s promise of employing more people after investing a healthy €2 million. We hope to be able to support this measure, but we will do so only after Fenech discloses how much it has cost our country in tax money.
The finance minister becomes irritable when comparisons to what is happening abroad are drawn. We need not mimic other governments in everything, but we should at least have the humility to learn from some governments in how the public is dealt with. If money, tax credits, or any other form of support is given out to a private entity abroad – the publication of such amounts would invariably follow. Not disclosing this information would certainly be perceived disrespectful to the tax payer, whether abroad or in Malta.
This newspaper asked the finance ministry why it is not citing how much the Trelleborg hand-out is costing the taxpayer, but in its replies, the ministry hid behind the Business Promotion Act, saying that in accordance with this law, such information cannot be disclosed “due to its commercial nature”.
Too bad it is this same law which states that the minister is in fact obliged to provide a breakdown of the information we requested, quoting January as the latest time in the year such data may be disclosed.
When this point was presented to the ministry, we got the cold shoulder. Maltese tax payers have contributed to saving the day for Trelleborg and its employees, and as worthy as such cause may be, those who paid for it have a right to be informed in full. It is unfortunately this behaviour which at times causes resentment, and makes the public lose trust in what government is doing to weather the storm.
It may be helpful for government to consider adding to its payroll, an independent public relations consultant to ensure that Tonio Fenech’s well-intended actions reach the public in a respectful manner – seeing that he may not be able to get this done out of his own steam. It may be an investment worth looking into, as its primary aim would be that of presenting government strategy clearly in a way that confidence is re-established in the business arenas.


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11 March 2009

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