Tax collection and punishment : is the Maltese punitive system counter-productive?

Abstract

Every state employs legislative measures to regulate their national tax collection. The total aggregate amount of tax due to the state can be seen as the tax debt of that state and the total tax collected is the tax revenue. The end-year tax debt of a state is the debt that remains uncollected at the end of a given year after the tax revenue is deducted. This final number reflects, in monetary terms, the tax compliance of the taxpayers and gives valuable insight into the efficiency of the tax management system of a given state. The efficiency of the tax management system is a direct result of the legal infrastructure that is in place for the collection of tax. The tax collector carries out the intent of the law within the words of law. Necessarily this means that the limits of the law reflect the limits of the tax system. The tax collector may only carry out his duty to the collect taxes, both when they fall due and after they have fallen due, according to the legislative powers granted to him in accordance with the legal methods available. The tax that cannot be collected is written-off as bad-debt, indenting the public funds of the state. An efficient and effective tax system all begins with a just and practical legal framework. The current body of law that regulates tax collection is a heavy sanctionbased system. The focus is put on the granting extensive enforcement measures for the collection of outstanding debt. This results in a heavy punitive system. The effects of this are far-reaching for both the individual taxpayer, the state and society at large. The intent of this thesis is to look into the current legal framework to understand and analyse exactly how it functions. Focus here has been given to the Maltese regime regulating income tax, however what has been learnt may be extracted and applied to other essential areas of tax law. The question to be answered by this thesis is: does the current legal system allow for efficient tax collection or is it actually crippling the amount of the tax collected? A look into the intricacies of our current legal framework will provide valuable insight on the above. The punitive measures that have been set in place may not yield the best results.