I must admit I am now completely confused. When we had the financial hole, we had tax hikes galore to fill the hole. VAT went up by 20% (3% on 15%), Eco-Tax (sorry contribution) was introduced, increase in social security contributions, increase in road tax, increase in registration tax on second hand cars, surcharge on water and electricity, departure tax, together with a myriad increases in charges for Government services big and small. Somehow because or despite the increased tax burden, Gonzi tells us that the economy has flourished. Now it is reducing tax that will make the economy flourish. Something is not quite right. Seems that Gonzi can have it both ways.
It seems that euros are oozing out of the woodwork such that Government does not need our money. If that is so why all the fuss that the country cannot afford to pay for this and that. For example do we afford pensions or not? Why do we need to raise retirement age if Government has so much money that it wants to give it away?
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4 comments:
Typical right-wing tactic - reduce taxes from income and put pressure on the consumer...
I would not agree with you. I was trying to point out the inconsistencies of the Gonzi argument. Increase tax and the economy grows. reduce tax and the economy grows.
Since MLP is also pledging to reduce tax the matter is not of one of left or right. There should be and there is a national consensus on what services should be provided by the state such as health, education, pensions etc. Those have to be paid out of taxes. Reducing Government revenue jeopardises services.
Government revenue varies which is why cuts work differently. First, most of the stuff you mention is not tax but payment of a tax. The eco contribution (not a tax) is paying upfront for the transportation of waste and the space it occupies in the landfill. I'm sure you know these things are not free. Same goes for the social security contributions: our pensions are contributory and, theoretically, should be paid for only by contributions.
Slashing these things (as Labour is proposing in some instances) won't help. As you also seem to know. Strategic and planned reduction of income tax has worked for a number of countries, not least Malta.
Dear Fausto. Please do not play the semantics game with me. Education, health, police and garbage are all services provided by the state and paid for out of tax. Municipal waste goes to the landfill, computers go to the landfill yet one is paid for out of taxes while the other out of a "contribution". You are an intelligent man. So please don't play such word games. Taxes, charges and contributions all take money from the taxpayer and go to the Government. The effect is the same. Secondly I don't understand the difference between tax and payment of tax. A tax that is not paid is tax evasion and not a tax.
If lowering taxes /charges /contributions helps the economy why has the Government been increasing them for the best part of the last decade?
By the way don't you realise that right now we are going through an artificial economic bubble because of the need for some people to "unhide" their old Liri before the Euro?
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