Fenech lashes out at banks for ‘not lending funds to taxpayers’ to pay due taxes

“There were people who wanted to pay their dues but didn’t have enough liquidity at hand,” Fenech told journalists during the launch of a press conference for a second tax amnesty for individual taxpayers as well as businesses that would be spread over a maximum of 18 months.

“Since the scheme did not provide for people to pay with instalments, people turned onto banks to borrow money to pay their dues to the Government,” Fenech explained.

“However, banks were less than cooperative with people who turned onto them to borrow money, on the premise that banks lend only for new investment, not paying taxes,” the Finance Minister lamented. “The Government is not the country’s bank,” he added.

Fenech revealed that he had discussions with banks about lending money to taxpayers to pay their dues under the first amnesty, however these had not been fruitful.

This led the Government to launch a second tax amnesty in which repayments will spread over a maximum of 18 months. Moreover, Fenech announced that the tax amnesty would also be extended to employers who had fallen behind in their income tax and national insurance payments.

At present there were €570 million in income tax dues and €95 million in FSS and NI payments from 9,035 employers until 2009. This balance, however, also included €258 million which were only estimated due as the employers had not filled their income tax, FSS and NI dues on time.

The second amnesty would cover taxpayers who had pending dues up to Year of Assessment 2009, as well as employers who had fallen behind in their income tax and NI dues from 2008 and 2009.

Under the second amnesty, individual taxpayers had two options – either to pay cash all the tax due by 31 October 2010. In this case, the reduction of penalties and taxes would be 85%.

If an individual taxpayer opted to pay by instalments, he or she would pay 30% of the income tax due by 31 October 2010 and the remained on a number of months, not exceeding 18. In this case, however, the reduction of penalties and dues would only amount to 75%.

In the case of income tax dues up to Year of Assessment 2008, balances would be reduced by 25% of one pays by cash till 31 October 2010. If a taxpayer decides to pay by instalments, the balance will be reduced only by 20%.

Fenech warned that if taxpayers did not fulfil their agreement with the Finance Ministry and stopped paying instalments, then everything will return back to square one and the reduction in penalties would be reduced.

He also announced that a special unit had been set within the Inland Revenue Department to examine all claims of statute of limitations with regards to income tax would be examined by this unit and then only accepted if it was actually ascertained that the claim was justified.

Taxpayers who had any incomplete forms had to submit them by 31 August 2010, however those who had pending claims prior to YA 1998 were not obliged to submit these tax returns.

Likewise, for employers who had fallen behind with their income tax and FSS dues between 1998 and 2009, there are two options – those who pay all their dues by 31 October 2009, they will get a reduction of 90%, while those who opted to pay by instalments would get a reduction of 80% from their dues.

Fenech also announced that recent amendments to the Income Tax Act passed in Parliament this year stipulated that employers who did not pay their tax and NI dues in time would face a penalty of 1% every month.

Once the scheme closes on 31 October, Fenech warned that he Government would be implementing the new law on defaulting employers until the entire taxes and NI due were paid.

He accused employers of paying their VAT declarations on time since they faced a 6% penalty every month, however they did not pay their income tax and NI dues as there was no penalty imposed in case of non-payment until now.

Asked for an estimate of how much money was the Government estimating to collect as a result of the second tax amnesty, Fenech claimed that it was “very difficult” to arrive at a estimation.

Last time around, the Government collected €43 million from 31,000 taxpayers.

After being asked by a One News journalist about his position about the implementation of a taxpayers’ charter, Fenech also announced that a draft taxpayers’ charter would be presented in the pre-budget document for discussion during the budget discussions.