12 - 18 July 2001

Fascinated with taxation – with no half measures

Joe Sammut – accountant, tax-specialist, ex-journalist and newscaster, ex-banker, politician and almost-priest! – reveals all to Kevin Drake

Joe, let’s go back a few years, if you please.
Well, I’m a Mosta man, born and bred. I’ve just turned 44 (My birthday was last week). I was born and lived in a house just a few doors down to where my office is today. I attended the Mosta primary school which was just in front of the house where I lived. I then attended St Agatha’s school in Rabat on a government scholarship. This was when the school was just starting out. It was a very good experience for me there and I enjoyed it immensely.

So does that mean that you were a very good student? Very studious?
I wasn’t a swot, no. But things then were different to today. The notion of “study” wasn’t forced down your throat from a very early age. Apart from our studies, a lot of emphasis was also placed on the importance of sports and play. We were better off than kids today in that regard. Even away from school we played outdoors a lot. That’s not really possible today because there’s very little space left for kids to play and there’s too much traffic. I suppose that in those days you did study but there was no exaggeration involved.

When you were at school did you already have an inclination towards accounts, economics, business and so on?
Not really. I never studied those subjects at school. I had Latin, physics, languages, and so on. At school I wasn’t preparing for this career, no.

Where did the turning point come about then?
In the mid-1970’s (1973-1974) financial specialists were very much in demand, the same way IT specialists are today. After secondary school I did my “A” levels and spent another year getting my ACCA. In 1976 there was a call for applications for the Central Bank. I was chosen and my first job there was counting banknotes! (laughs). There was a year or two of doing that. I thought that at the Central Bank I’d be in a position to take important decisions. Far from it! It wasn’t a very impressive beginning! After two years though I joined the banking department. There I started to realise that there were new openings, I began to discover new areas. I was quite
fascinated actually. 1980 was the proper turning point. In that year, the Institute of Bankers began its first night-school (in the afternoons). This was an incentive for us to leave work early, and in so doing also obtain a diploma.

Was this where you decided to “go it alone”?
Not at that point, no. I wanted to go one step forward at a time. I wanted to reach new horizons through, for example, obtaining a degree. I followed the course at the institute and after a year I obtained the banking certificate diploma, the first step towards the ACIB. After that I went on to continue studying, intermittently, for the ACIB. In 1982, however, I had all the qualifications to join the student-worker scheme at the University. At the time, the Bank sponsored two or three employees to follow University courses. I applied and was accepted and so I joined the BA Accountancy course. In the meantime (1985), while I was at University, I got married. This wasn’t too difficult, financially-speaking, because although I was a student I was still holding down a job.

Did you find University hard-going?
Well, the first year was hard because of subjects that were completely new to me like Pure and Applied maths, calculus etc. That was really hard and some students actually dropped out. Nevertheless I persevered (also with the help of my sister who was very good at Math) and completed the course. I was probably the oldest student in my year (25 or 26 when I began). There was a very small student body on campus too. The University then was substantially different to what it is today. I was considered to be part of the “Elite” too simply because I owned a car! (laughs)

You didn’t stop there though did you?
I graduated in 1987/1988. Along the way I continued to study for my ACIB too. I got that in 1990. In that same year I went to Bristol to start working on a Masters degree. This was quite easy-going too, in the sense that it was a sort of extended-studies programme, which allowed me to come and go when it was convenient for me.

Did you specialise in anything particular?
Taxation was the subject that fascinated me most. At the time I was already thinking of going into Taxation Consultancy if ever I decided to open up a private practice.

Going back just a little bit, why accountancy? You were working in a bank, you had three options to choose from at University.
Accountancy was an investment in my future. Accountancy was probably the most “solid” choice. I was being quite practical here. Public Administration & Business Management were courses mostly geared for people who intended to be (and remain) employees. Accountancy gave you wider options. You could gain employment or strike out alone if you wished.

You mentioned the fact that you were “fascinated” by the whole idea of taxation. Why?
It was and is fascinating! (smiles). It was also an area that was rapidly becoming much more sophisticated and more complicated all over the world. New tax systems were being introduced regularly. There defin-itely was a niche in the market. I also predicted that these taxation trends could also arrive here in Malta in the near future. The tax-specialisation niche wasn’t at all exploited here. It still isn’t. In fact there’s still very few tax consultants around.

Do you think that people, as a rule, have a bad opinion of tax specialists? Do they simply see you as being expert tax evaders?
Unfortunately that is precisely the impression that many people have. We have a responsibility to correct these misconceptions. I look after the taxpayers’ rights, that’s all. Promoting evasion is definitely a no-go area as far as I’m concerned.

But don’t people expect a lot from you? Don’t they expect you to help them evade taxes?
Yes and no. People don’t like to pay taxes because they can’t perceive any benefits deriving from the taxes that they pay. Governments here (and more specifically: the Public Service) consume taxes incessantly without giving anything tangible back to the public. I pay taxes but I don’t obtain any value. I think that it is very important for people to see that they are getting some sort of return for the taxes that they pay. Because they can’t see any value, it is very difficult to convince people to pay their taxes willingly and dutifully. The Public Service is particularly responsible for this perception of taxes being eaten-up without anything being given back to the public. Try phoning a government department! The blatant lack of adequate service just increases the exasperation and frustration. Lm26m were given to the Public Sector in wage increases and other benefits. There hasn’t been, however, any commensurate increase in productivity. People notice these things and, in their own way, they rebel.

Do we have a healthy sense of fiscal morality in Malta?
Well, let’s just say that it’s better than it was. It’s still a far cry from other countries though.

Is this slight “improvement” due to stricter controls being imposed or is there some greater awareness being created?
Things have improved with regards to fiscal morality because people know that the government has a serious deficit problem. People feel some sort of obligation to contribute towards the alleviation of this problem. Don’t get me wrong. Everyone is very much aware of the strict controls being imposed and of the tough tax-compliance measures being enforced too. Fear of consequences plays an important role here too. The fact that people are aware of the country’s financial problems helps, though. It doesn’t mean that they will pay their taxes willingly and with a smile! But at least it means that people are acknowledging the need to pull their own weight and help lessen the load.

You talk of a great disillusionment with the civil service. How can people re-establish their faith in the
public sector?
More discipline is needed. We can’t continue to abide by a situation where a good number of government employees are already out and about, doing their “own thing” at 9am! People want to see tangible results that justify the immense amount of money being pumped into the public sector. More productivity needs to be seen. A better overall service needs to be given to the public at all levels. People need to perceive the value that may be obtained from the taxes they pay. If the Public Sector restores credib-
ility in itself, the public will be more disposed to pay taxes willingly. The country also needs to “Do more for less”. Efficiency is all. Banks here are very efficient. Obvious comparisons are therefore made between the bank’s service and government’s service. There’s a big difference!

Do you think that it’s therefore necessary to impose things on the people (because of a conspicuous lack of discipline)?
There’s imposition and there’s imposition. Some measures being taken at present are quite debatable. You can’t impose certain things or change deep-rooted mentalities overnight. You need to pace the changes you impose.

Is it something inherent in our culture, this business of going from one extreme to another overnight?
It’s a Mediterranean characteristic I believe. In this regard I think that we are very similar to the Arab people. With us it always has to be “nejja jew mahruqa” (Raw or burnt to a cinder). We tend to do things using extremes. Northern countries are more consistent. Take Fiscal Morality for example. One day it’s zero, the next day it’s 100 per cent. The problem is compounded by the fact that when rules and regulations are imposed upon the public, for reasons of “improved efficiency”, there’s no improvement registered in the Public Service. In 1995 Vat was introduced and many people were driven to distraction because it was introduced too fast, too quickly. It doesn’t make sense. VAT needed to be introduced gradually so that people could adapt. Persons who never kept books, who never organised their financial matters – how can you change that sort of mentality overnight. VAT implied many new expenses too. I think that there was such a negative reaction because the change came about so quickly. Were it to have been introduced grad-ually, it would have been much less of a trauma for many people.

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You’ve been involved in politics directly since 1996. Why politics? Didn’t you already have enough on your plate?
I had and still have quite a lot on my plate! (laughs). I’m also writing regular articles now as well, relevant to financial matters and political issues. I write about things related to my work but in a broader perspective: how these things effect everyone and the implications that they have upon everyone’s life. People are intimid-ated by big financial terminology. I like to simplify matters. When people start to understand what they previously felt to be obscure matters, they tend to become very interested in the subject at hand. When you simplify things for people, its like a discovery for them and they feel elated. Learning must be fun.

Do you have fun? Do you enjoy doing what you do.
Yes. I derive great satisfaction. Many of my clients leave here satisfied. They are relieved and they appreciate the advice I give them. That is something that gives me great satisfaction: Seeing others satisfied with what I’ve managed to do for them.

Do you look at your work as being a vocation?
Yes. Money is not so important to me anymore. When you’re starting out in your career, yes. Money is the be-all and end-all. I’m mid-way in my professional life now and so I feel that money is not my priority any more. My priority now is commanding respect and a reputation for integrity. Obtaining that respect is in itself an integral part of my job satisfaction. You need to be very dedic-ated in this line of work. People pressure you a lot. They have one or more big problems so they exert pressure upon you for the problem to be solved. I try to help solve some people’s personal (and not necessarily financial) problems too. People appreciate it when you show interest in their personal affairs (without being nosey of course). I am not an “expert” in domestic issues and family affairs, far from it! But sometimes I get to feel like a priest! (Laughs) I try to contribute what I can, when I can, to help people if possible, even if it’s nothing to do with financial matters. The “personal” dimension of your work is extremely important.

Did this “personal dimension” contribute to your involving yourself in politics?
Definitely. You’re very close to people so you feel more “qualified” I suppose. People encourage you become involved too. Social problems have increased greatly in Malta. Many of us live beyond our means and that is proving to be a big problem. This is especially so with young couples. Young couples make a huge number of financial commitments which then have to be offset by overtime, extra jobs and so on. When this is the situation, the smallest problem will make this family unit crumble, then the serious social problems begin. Financial and social problems are directly related.

Did your political involvement influence your profession negatively in any way?
No. Not at all. I have a very healthy mix of clients, people coming from all sorts of backgrounds and political persuasions. The political polarisation has decreased quite a bit in Malta. There’s a lot more political maturity, especially noticeable in the ever-growing number of floating voters. We are Mediterranean people, immensely passionate about all things, so it’s very hard to approach politics with a level-headed objectivity. But people do reason things out differently now. They use their heads much more than their hearts nowadays. Nevertheless, we’re still a long way off, but the transition towards a fuller political maturity has begun.

Does your political “life” give you satisfaction?
Satisfaction, yes, and disappointments too. In 1996 I was very close to being elected. So close and yet so far, so that’s quite painful! (Smiles). A miss is as good as a mile, and all that. Unless you’re extremely careful you can get very disappointed in politics. More often than not, there’s an incredible amount of competitiveness between candidates of the same party in the same district. This worries me. People are “branded” simply because of their association with a particular candidate. It is very ingrained in our mentality and it’ll be very hard to change.

Back to taxes. The tax system has become much more complex here. This has presented quite a few problems to many people. On the other hand the upside is, that for accountants, these are the “Golden years”.
Definitely! (smiles). Our profession was boosted no end in 1995 with the introduction of VAT. No-one’s arguing that point. There was literally an explosion of work to be had for accountants. I lived through it all. I left the bank in 1992 (for reasons which were made quite public) and decided to start my own private practice. I suppose that I was very lucky because I happened to be in the right place at the right time.

Do you attribute success to luck alone?
It’s luck coupled with capability, talent and hard work. But you definitely need luck. As I said, I left the bank in 1992. In that same year we saw the introduction of the Capital Gains Tax. In 1994 there was the build-up to VAT. In 1995 VAT was introduced. More recently new tax systems were and are being created. This was an excellent time for accountants and tax-specialists and I was excellently placed to exploit this. These past few years have been very fruitful for the professionals in our line of work.

Don’t you find that this though could provide potential conflicts of interest between the professional “You” and the political one?
That’s a very interesting point. For example I’m one of the VAT auditors appointed by the department to conduct certain investigations, or “assignments”, that the VAT department feels require expert advice. So in actual fact, I’m almost a VAT department employee. Because of this fact I feel the need to steer clear from writing, publicly commenting or involving myself in debates about VAT and the VAT department. It’s auto-discipline. It’s not something that’s been imposed upon me but something I feel is appropriate because of the potential conflict of interest.

Accountants in other countries are sometimes seen as being eminently boring people... or else eminently crooked. These opinions don’t really surface at all here do they?
No. Here in Malta the accounting profession is well-respected. The Institute of Accountants were at the forefront when it came to introducing many forward-looking ideas and
initiatives. They introduced a system of continuous professional education, for example, wherein all chartered accountants must spend a minimum of 30 hours a year on study programmes. When you have a self-
regulating institute that is very professional and serious in the way that it “guides” the profession – people notice these things and respect is generated. I am very satisfied with the Institute and it also makes me proud to belong to this profession. In Malta there aren’t any pre-conceived ideas about accountants being crooked or boring. I think that the image we have is a very positive one. Another contributing factor towards this was that we had a small number of accountants who made a very good name for themselves in various spheres, including management. Wherever they were involved (be it in the private or the public sectors) they created an enviable reputation and thus also helped to give a very good reputation to the profession. Take John Zarb for example, a person I respect enormously. He is someone who is completely apolitical, respected by all and sundry, and a person renowned for his immense integrity. People like him helped enhance the image of the accountant.

Are you perfectionist?
Not too much, no. Where the MFSC is concerned, yes (Smiles). In most things though, what’s important is getting straight to the heart of the matter. You can easily get bogged down and find yourself lost in details if you aren’t careful. That, of course, can hinder you from coming to grips with what is really important. Some people who try to be perfectionists miss the wood for the trees. Some of my clients try to be perfectionists. Take teachers for example (Laughs). No offence to the profession, but teachers tend to be people who try hard to be perfectionists. This “attempt to be perfect” just complicates my life no end. In life, as in work, you need to know how to identify a problem immediately and deal with it first and foremost.

Are you a workaholic?
I definitely work more than an average 40-hour week. I work very long hours but, I suppose, there’s a reason for it. The way I reason things out is: ‘If I’m going to work till after 6pm and miss out on “quality time” with my family (especially in winter), then I might as well work till 10pm. If I’m working till 10pm, then I might as well work until midnight and beyond!’ (Laughs). Apart from that, I also realised that these hours are very convenient for my clients, many of whom work till 7pm. You need to be flexible. I sometimes do home visits too, or visit clients in farms where I have to pass through pig pens and all sorts of stuff! (Smiles) I am at my clients’ disposal and so I have to make myself available.

Has this dedication turned into “workaholia” though?
I suffer from big headaches if I’m not working. I do try to adapt and I do try to find time for the family, but inactivity makes me feel tired or else it gives me headaches. Working has become something of a compulsion. But our mind is a bit like a field: the more you work it, the more abundantly it produces.

Do you relax much?
Not really. I suppose that I only relax somewhat when I’m reading. I read all sorts of stuff, from specialised journals to novels. Naturally I love spending time with my family too. The little time that I can grab in order to be with them makes the time that we spend together much more
valuable.

You’re pretty successful in your profession. What does success give you?
I don’t call it success, as such. Your work, your profession, like life, is a journey. I started out from nothing and today I’m here, I’m at this particular point of my journey. I didn’t have anyone backing me, I didn’t get where I am by obtaining any favours.

So that gives you a sense of achievement, no?
In a way, yes. The most important thing is that you begin a journey and that you manage to arrive at a point where you derive great satisfaction. One thing that gives me a great sense of achievement is having other accountants and professionals coming up to me for advice. When you are in demand, when you’re sought after by your peers, that gives me great satisfaction. In my line of work, especially with regards to Taxation, I’m often requested to give specialist advice on various issues. That in itself is recognition for what you’ve
managed to accomplish. The demand for your advice, for your services, is the thermometer of achievement.

What are your goals?
To maintain standards and to maintain a certain pride in what I do. I want to ensure that I will also retain my job satisfaction. Today it’s very easy to burn yourself out. It’s hard-going and harder still to maintain standards. Doing that is already enough of a goal. Another goal for me is sustaining the demand for the
services that you offer. When you are constantly in demand, that probably means that your other goals (maintaining standards and pride-of-work and so on) are being reached. As far as the elections are concerned I suppose that I also have goals. Maybe this time I’ll be luckier! I would like to have a more direct role in public office. Then again, if that comes to pass, I”ll probably have to face the problem of giving up my profession or, at best, juggling the two. That is a problem, but one that I’m ready and willing to face! (smiles).

What’s the best advice that you’ve ever been given?
Alfred Mifsud, a lawyer friend of mine, once told me: As long as you do things properly, you need never worry. You need to be convinced of what you’re doing, you need to be sure, and if you are, all will be well. Problems arise the moment you start being plagued by doubts. This sort of conviction, this sureness, is something that comes from maturity. To develop well as a person you need the maturity that is fashioned over a number of years. It’s essential. It’s more difficult for you when you start out in life because you don’t yet have that maturity.

What are the ingredients for success?
There are very few. You need to know where you’re going. You need the “direction”. You need to acquire the means to arrive there (wherever “there” may be). You also need to be in the right place at the right time. The latter, which is luck basically, is something that’s independent of your own free will. But the other two aren’t. You need to work hard at those two. Hard work. Very hard work and total dedication.
No half measures. Half measures are no measures at all. You do need to make certain sacrifices in order to “arrive” at your destination. You also have to be resolute and resilient and not be deterred by obstacles or let yourself be swayed hither and thither. Total perseverance is what it takes. That’s it!