Government owed €1 billion in ‘collectible arrears’ in 2022

More than €1 billion was owed to the Maltese government, mostly in uncollected taxes, fines, and fees, as of the end of 2022, according to data submitted to parliament by Finance Minister Clyde Caruana.

Caruana, also responsible for Inland Revenue and the VAT department, provided data that shows government departments are eligible to collect some €825 million in arrears.

The Ministry for the Economy, responsible for collecting rents through the Lands Authority and from INDIS Malta for industrial land, comes in second place, with arrears of €75 million.

The Social Justice and Solidarity Ministry, the biggest spender regarding social benefits, comes a close third with arrears of €72 million—most of the latter concerns unpaid national insurance from employers and employees.

Caruana has talked for years about the need to increase debt collection efforts and warned businessmen that they “need to start paying tax”, but nothing has been effectively implemented.

The amount of uncollected dues to the government during the past years has increased, with billions now estimated to be uncollectable and likely to be written off the government’s books.

A National Audit Office report in 2021 shed light on the issue of escalating uncollected dues and how they have been allowed to continue, reaching more than €6 billion.

This has happened due to the “insufficient efforts” by various administrations to collect the money efficiently and when it was due. In most cases, the money owing was left unchecked for so long that it has become statute-barred, meaning the legal time frame in which they can be collected has expired.

Among the dues mentioned by the NAO that will never reach public coffers are some €1.2 billion in income tax and €4.2 billion in VAT.

Meanwhile, the government keeps registering one annual deficit after another, with debt surpassing a record €10 billion this year.