Former Labour leader Alfred Sant wrote in his column in It-Torca that VAT was still behind the many problems facing the self-employed.
Ruling out an overhaul of the tax system, Sant said that “we should recognise the problems the introduction of VAT has inflicted on the self-employed”.
Elected with a pledge to remove VAT in 1996, which he carried out a year later, as prime minister Sant introduced the short-lived Customs and Excise Tax – a sales tax that did not have to be collected by the retailers and paid to the government. CET was replaced once again by VAT in 1998 upon the PN’s re-election.
“The arguments against the introduction of VAT we brought up were centred around the fact that this tax was not suitable for our country due to our size and the smallness of our enterprises,” Sant wrote. “The system is complicated to manage. In order to cover the administration costs of VAT, we require a much larger number of enterprises than what Malta could ever have.”
Sant argued that due to the business culture of allowing long credit terms, “VAT increases pressure on the cash flow of those small enterprises waiting for a long time before getting paid by their clients… Contrary to what the PN states, VAT often increases tax evasion…. We now find ourselves in a situation where a large number of small businesses must break the law if they are to survive.”
Sant called for a plan to ease VAT’s burdens on the self-employed but expressed doubts that this would be carried out. “How can the same people who brought us to where we stand today, accept the need of action to ease the effects of their own decisions? ...In spite of the recession we are going through, the self-employed will still be regarded as that sector which, both politically and economically, allows government to take it for a ride.”