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Print Posted by Kiribiss.com on 15/07/2017

Getting there… slowly

Getting there… slowly

John Consiglio

Slowly, but surely, we’re getting there. It’s quite some time since I’ve been publicly arguing strongly in favour of some form of property tax on long-vacant unutilised properties in Malta. But now, listen (from Parliament recently):

Minister for Social Solidarity Michael Falzon: “We need a culture change to the social housing project in Malta… new realities are posing problems which warrant different approaches.”

“There are big pressures on the rental market.”

“MPs need to take tough decisions to help alleviate the housing crisis, including taxing empty properties, and instituting rent controls and means testing, as suggested by [Nationalist MP] Ivan Bartolo.”

Parliamentary Secretary for Housing Roderick Galdes: “Landlords have absorbed what subsidies the government gives to needy families by increasing their rents in response.”

“Landlords are [often] not paying tax and refusing to confirm their clients’ tenancies.”

Ivan Bartolo: “…in favour of government intervention to calm the market, including fining those who are leaving empty residences to dilapidate.”

Andrew Narwold from the University of San Diego (March 9) sees “property taxes may help save Malta’s heritage”, and you will easily understand why this writer, and many others in this country who for long have seen property in Malta as a non-clearing market (i.e. one where the simplistic concepts of supply and demand are simply not working), feel that at long last social justice, within the particular context of a small island economy, may yet have found some policymakers who are prepared to think and decide outside of the usual free capitalistic market mindsets or paradigms.

While the government’s praise-worthy plan to build 680 social housing units may well go a long way towards alleviating some of the burden the government is facing by way of requests for social housing (reputed to be around some 3,000) I do not feel that this massive project on its own will simply and automatically bring back total sanity, and effectively curb many landlords’ greed and hard hearts towards those to whom they rent.

Indeed a project of such size also brings with it considerations of how it is carried out (where, how, what sizes of rooms, what environmental elements, etc).

Hence, for example, we also need legislation: to prohibit the charging of rents that go beyond a certain percentage of an occupants’ income (after all, even banks use some such yardstick when giving loans for house purchasing);

That imposes the registration with government of every single rental agreement (also to eliminate tax evasion/avoidance);

And, policy and legislative changes to curb developers’ greed for bringing down houses to replace with apartments.

These and other measures can certainly bring the much necessary present culture change in our country.

At some point in time the country will also need to see how much property on Malta’s land surface is in fact owned by foreigners; how much of it is purely and effectively solely residential, and how much is in fact speculatively owned.

I’ve heard of keys for holidays in properties in Malta crossing tables on agreements reached in pubs in London, and elsewhere, with settlement also being done there to the total exclusion of the tax authorities in Malta.

With an Income Tax Department that is hardly sufficiently staffed to cope with much other work, one can hardly see whatever current surprise checking may be taking place as being sufficient to quash the present jungle in this area.

But, as said, the debate in Parliament is a good indicator of the direction we’re going. Simply asking ever more by way of rent from workers with fixed incomes will hopefully soon come to be eliminated.

John Consiglio teaches economics at the University of Malta.

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