‘What needs to be collected will be collected’: Finance Minister toughens stance on tax evasion

Finance Minister Clyde Caruana said that government is cracking down hard on unpaid taxes, vowing that no individual or business will be spared if found in breach of tax laws.

Speaking in Parliament during a debate on amendments to tax law, Caruana signalled a sterner approach to enforcement, and a newly implemented system has equipped authorities with the necessary tools and increased surveillance to clamp down on tax evaders.

“What needs to be collected will be collected,” Caruana said, warning that non-compliance would be met with serious consequences.

Caruana said that no government before this one has invested so heavily in the country’s tax collection system, which was intentional.

He said that the newly implemented system has identified 80% of people found of evading tax, and the system is able to scan all of the country’s taxpayers in a single day, helping authorities pinpoint those who have failed to pay, with such scans carried out monthly.

Caruana said that the system is also able to compute audit trails, providing authorities with data to identify irregularities.

“This is not about punishing people, but about restoring fairness in the system. Those who have always paid what they owe should not be undermined by those who do not,” Caruana said.

Caruana criticised the PN over its statements that the proposed bill “rewards tax evasion,” deeming such claims as false.

PN MP Graham Bencini spoke of his concern on the proposed bill, saying that it seems to favour individuals with ongoing court cases related to tax evasion or unpaid dues.

Bencini also alleged that one of the potential beneficiaries is a former client of the Prime Minister, and said that instead of passing this law, government must focus on offering more flexible payment schemes and reducing interest rates and fines to support small and medium-sized businesses.

Caruana told Parliament that the government has significantly ramped up penalties for tax evasion, with fines now set at 25% of the amount due, up from the previous 15%.

He said that if someone owes €1 million in taxes, they would now face an additional €1 million in unpaid dues, €136,000 in interest, and the new, steeper penalty, bringing the total recovered by the state to roughly €1.5 million.

“I have a duty to collect what is owed,” he said, adding that prison sentences serve little purpose in such cases.

Instead, raising fines is proving more effective in both recovering funds and deterring tax evaders from taking the risk, Caruana said.

He said that while the government has always offered assistance to those in need, and has never turned them down, there is now a firmer stance on compliance.

Caruana said that stronger tax enforcement has also played a role in reducing Malta’s budget deficit, a trend acknowledged by both the International Monetary Fund and the European Commission.

The Finance Minister said that he has stayed true to his earlier pledge to tackle tax evasion head-on.

“What needs collecting, will be collected,” Caruana said.

The bill passed the Committee stage with 38 in favour, and 28 against.