Scope and limitations of company tax planning in Malta

Abstract

All taxpayers wish to pay as little tax as legally possible and all governments wish to collect as much tax as legally possible. The tax system invites discontent from taxpayers, who might then resort to devices and mechanisms to minimise the percentage extracted from their income. A tax system is rarely perceived to be fair. This also seems to be the stance taken by the Revenue. Essential characteristics of a tax are that it is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority. "I have to refer to the attached form. I regret so grave I am unable to complete the form as I do not know what is meant by filling this form. However, I am not interested in this income service. Could you please cancel my name in your books, as this system has upset my mind and I do not know who registered me as one of your customers". As reported in the Economist, Mr. Hague made the big claim that high taxes meant "less freedom, less responsibility, less community, more dependency". Higher taxation makes people less willing to pay it, and therefore increases the need for state coercion. Citizens come to see themselves not as willing co-operators with the state but as the downtrodden victims of authoritarian tax gatherers. In the law of high taxation, justice has no place at all. In his dictionary of political thought, Roger Scruton lists the American philosopher Robert Nozick, who 'regarded taxation as an intrinsic violation of justice, since it involves forcing the citizen to work for a certain number of hours without reward'.