Andrew Sciberras

Paul Nyrup Rasmussen, current president of PES has recently slammed the EPP for making mention of tax cuts to solve the current crisis. He claims that "the 'draft EPP document election document 2009' gives a clear commitment to cutting taxes, although the shorter 'draft EPP manifesto' hides any mention of tax cuts or unpopular public spending cuts." I quote from the EPP manifest which encourages member states:

To alleviate the general tax burden in Europe - which is still among the highest in the world - in order to provide more incentives to work, save and invest in Europe as reccomended by the Lisbon Agenda.

I have skimmed through this lengthy document and on the outset it appears reasonably motivated; encouraging, amongst other things, full employment and a social based market, regulation, child-care, a clean environment. But Rasmussen's main concerns are on reducing public spending which is definitely not what is needed in a time when workers are struggling.

“EPP tax cuts mean EPP spending cuts. Why don’t they just come out and tell us they want to axe public services? They don’t dare because public spending cuts are the last thing you need at a time of rising unemployment. It is the same old conservative rhetoric, the same old tired ideology.”

The socialist dictum of tax and spend has proved its worth for we would not have had a social welfare state today. Indeed, when Boffa's Labour government in 1948 introduced for the first time the Income Tax regime it was lambasted by Mizzi's Nationalist party for introducing Communism and Marxist elements into the country and this because money would be extracted from the rich, to be given to the poor. Rasmussen also observes that the Nordic countries, which have punitive tax regimes are "among the most competitive in the world...the taxes pay for the life-long learning, the research and development, the child-care." "How can the EPP pay for better child care and for more R&D" he claims, "if they cut taxes?"

Upon reflecting on all this I ask myself - why is the Labour Party today so insisting that taxes be cut (not to be confused with the hotch-potch energy tariffs)? Is Muscat not pulling the same rope as that of his European socialist counter-parts? Shouldn't he be placing more emphasis on public spending, like Rasmussen is doing? But then again there are different contexts and different means. A particular context that comes to mind is our miserable wages. Our Scandivian counterparts may fork out a considerable fortune in their tax return but they surely earn a hell of a lot more then we do. In this sense, the situation is uncomparable. As for the means, and I'm not sure what the EPP exactly proposes, I believe that in this rough patch tax cuts should be given to low-income and middle-income earners. Indeed, Obama intends to reduce taxes for 95% of working Americans whilst refusing to postpone a tax-hike for families earning more than $250,000. In this manner he aims to create more wealth for those in the bottom and middle ranks, rather then relying on the unlikely event that the wealth from those most well-off in society will somehow "trickle down". One can judge, from the recent economic crisis, whether this wealth has really trickled down.

In the end I hope that Muscat's economic policy on tax cuts is a short-term solution with long-term insight. By this I mean that in these dire times tax-cuts for low and middle-income families is well merited so as to keep worker and SME's afloat and capable of overcoming financial difficulties but let us not transform tax-cuts as some quasi-religious dogma to the overall detriment of the welfare state. On the other hand the government is not there to collect money and make profits, whilst treating people as numbers and statistics. The government is there to serve the people, especially those most in need, and not to be served by them.