PLPN media houses owe millions to the VAT office. How can PLPN be credible when speaking about measures to bring tax dodging and tax evasion under control? Would it not be more appropriate if they bring their own house in order first?
Earlier this week we were informed that the PL and the PN media houses have a combined unpaid VAT tax bill to the tune of €5 million. This amount is due to the exchequer and represents VAT collected by them and not paid to the state coffers. The retention by the PLPN of this sum of €5 million also signifies that the party media houses are making use of monies due to the national exchequer in their day-to-day workings! It is an undeclared loan to the benefit of both the PL and the PN. Whenever it suites them, PLPN are in agreement. They are on the same wavelength. They are taking a free ride on the taxpayers back, year-in year-out.
Business is right to publicly complain on the preferential treatment meted out to the PLPN media houses on outstanding VAT payments. It is a reasonable expectation that the country’s leaders should lead by example!
The problem is however much larger than that. Some time back the media alerted us on the PLPN pending water and electricity bills too. The pending amounts due were known to be substantial. The latest available information is of a combined outstanding bill of €2,500,000. Up to date information is difficult to come by as ARMS considers it as a confidential matter, notwithstanding it being a matter of public interest due to its abusive nature. Is it not about time that ARMS deals with PLPN companies in the same way as it deals with its other customers and ensures that they pay their bills on time?
There are also arrears due for National Insurance contributions and Income Tax deductions for employees of political parties and their companies. It has in the past been indicated that these arrears may run into many million euros even though the precise quantum is not known.
In effect this means that the PLPN have another undeclared source of finance for their day-to-day operations: an interminable credit on taxes and payments due to the state and its various institutions. Another loan financed by taxpayers in the region of around €10,000,000!
This has to be seen within the context of the underhand deals revealed from time to time between PLPN and business. The latest revelation of a possible draft agreement between Labour and Yorgen Fenech through which a €200,000 “deal for services” by the party media was planned, is a case in point. This is reminiscent of the other deal some years back between the dB Group and PN companies also for “services” by the party media. In both cases these deals are intended to disguise effective donations as “payment for services” thereby circumventing the donations regulations which impose an annual cumulative limit of €25,000 for donations to political parties from any one specific source.
Any business owing so much to the exchequer would be in deep trouble, on the inevitable fast track road to bankruptcy. Such a business would also be risking a takeover of its assets to make good for the substantial amounts due. But for the PLPN it seems that there is nothing to worry about!
All this points to a major intended deficiency of the legislation regulating the financing of political parties. It has been repeatedly pointed out that the PL and the PN are continuously using their companies as a convenient front to go around the political party financial regulatory framework.
As expected PLPN are in denial. The PL insists that its companies have not entered into a deal with Yorgen Fenech. The PN on the other hand insist that all is above board. Yet they continuously fail to play by the rules. Audited accounts for their companies have not been presented for many years. As a result, there is no way to verify whether and to what extent the PLPN commercial companies are innocent of the charges that they are being continuously used to circumvent the rules regulating the funding of political parties.
The rules regulating companies owned by political parties should be tightened up. Such companies should be scrutinised within the framework of the Financing of Political Parties Act of 2015. Real-time reporting is essential in order to ensure that such companies are not used any more to circumvent the rules.
As things stand, at this point in time, the PLPN and their commercial companies have appropriated a substantial loan without authorisation. How’s that for good governance? Another contributory factor to grey-listing?
PLPN cannot solve this. They are an integral part of the problem.
Only the election of Green MPs can clean up this PLPN mess.
Published in The Malta Independent – Sunday 12 September 2021