Building a different economy

The Nationalist Party’s proposed income tax reforms have generated significant discussion during this electoral campaign, and rightly so. Taxation affects every worker, every family, every pensioner, and every business. But these proposals are not simply about reducing taxes. They are about something much bigger—changing the direction of Malta’s economic model.

For years, our economy has been driven by one dominant approach—rapid expansion through increased economic activity, population growth, and continuous consumption. This model has undoubtedly produced strong headline growth figures. Government revenues increased, unemployment remained low, and GDP expanded steadily.

Yet, despite this growth, many people feel financially weaker, not stronger. Families continue struggling with rising living costs. Young people find homeownership increasingly difficult to achieve. Workers feel that salary increases are quickly swallowed by inflation and taxation. Quality of life pressures are becoming more visible across the country.

This growing disconnect between economic statistics and daily lived reality is precisely why the Nationalist Party believes Malta needs a different economic approach.

Our tax reform proposals are therefore not isolated electoral measures. They form part of a broader strategy aimed at moving Malta towards a more sustainable, productive, and people-centred model of growth.

The most immediate aspect of the Nationalist Party’s proposals is the restructuring of Malta’s income tax bands.

Income tax bands reform

One of the central proposals is increasing the threshold for the highest 35% tax rate from €60,000 to €80,000. This is an important reform because it addresses a growing problem affecting middle-income earners and professionals.

Today, many workers who improve their salaries through promotions, overtime, or professional advancement quickly find themselves pushed into higher tax brackets. The result is that part of the benefit of career progression is immediately lost through increased taxation.

The Nationalist Party believes workers should be rewarded for effort and ambition, not penalised for progressing professionally.

By widening the tax bands, workers will retain a greater portion of their income, strengthening take-home pay and improving financial resilience.

Another major proposal involves families with children. Under the Nationalist Party’s plan, parents with two children would not pay tax on the first €35,000 of income. This builds upon existing reforms but goes further by substantially increasing the non-taxable portion of family income. This proposal reflects the reality that families are under growing financial pressure. Families are carrying significant burdens while simultaneously forming the backbone of Malta’s economy and society. The Nationalist Party believes economic policy should recognise and support this reality directly.

Importantly, these measures are not designed merely as temporary electoral giveaways. They are structural reforms intended to permanently strengthen disposable income and improve long-term financial stability for households. This distinction matters enormously.

The current government’s economic approach has increasingly relied on subsidies, bonuses, and direct financial interventions whenever pressures emerge. While such measures may provide short-term relief, they also create an economic culture increasingly dependent on continuous state support.

The Nationalist Party believes there is a better alternative.

Rather than continuously compensating for economic pressures through public expenditure, we believe government should strengthen the earning power and independence of workers themselves.

This is why the Nationalist Party has also proposed exempting the first €10,000 earned from overtime and part-time work from taxation. This proposal directly rewards productivity and effort.

Many workers today take on overtime or additional part-time work simply to cope with rising costs. Yet a part of these additional earnings is immediately lost through taxation. By exempting the first €10,000, workers retain the full benefit of additional effort and productivity. Again, this reflects a broader philosophy.

A sustainable economy should reward work, productivity, and initiative. It should create conditions where individuals strengthen their own financial position through effort and opportunity, not through dependency on periodic government intervention.

Tax bands indexed to COLA

The Nationalist Party has also proposed indexing tax bands annually according to the Cost of Living Adjustment (COLA). This is a particularly important reform that addresses a hidden but significant problem within the current system.

At present, when workers receive COLA increases intended to compensate for inflation, part of those increases can effectively be absorbed through taxation as workers move into higher tax bands. In practical terms, this means inflation adjustments intended to protect purchasing power are partially neutralised.

The Nationalist Party believes COLA should genuinely remain in workers’ pockets. By automatically adjusting tax bands in line with COLA, workers retain the real value of cost-of-living adjustments rather than losing part of them through bracket creep. This proposal reflects a broader economic principle that workers should not become poorer through inflation while government revenues quietly increase through fiscal drag.

Our proposals also include a guaranteed minimum annual improvement of €1,200 in take-home pay through a targeted rebate mechanism where necessary. This means that where tax band revisions alone do not generate sufficient savings, additional rebates would ensure workers still benefit meaningfully.

Critics may ask whether such reforms are affordable. This is a legitimate question and one that must be addressed seriously. But the answer depends largely on what type of economy Malta wishes to build over the coming years.

The current model increasingly depends on continuous expansion, rising population pressures, and growing state intervention simply to maintain stability. But it has also created infrastructure strain, housing pressures, labour shortages, and declining quality of life.

A higher-quality growth model

The Nationalist Party believes Malta now requires a transition towards a higher-quality growth model. This means focusing more heavily on productivity, innovation, technology, education, entrepreneurship, and higher-value industries.

Tax reform plays a critical role in this transition.

Lower and fairer taxation strengthens incentives for skilled work, professional development, entrepreneurship, and investment. It helps retain talent within Malta and improves competitiveness. Most importantly, it strengthens household purchasing power structurally rather than artificially. This is fundamentally different from an economy built primarily around subsidies and redistribution.

The Nationalist Party is not arguing against social support. Vulnerable families must always be protected. But there is a difference between targeted support during genuine need and building an economic model increasingly dependent on constant government intervention.

Our vision is based on investing in people. That means empowering workers to retain more of what they earn. It means creating stronger incentives for productivity and innovation. And it means shifting Malta towards a more sustainable economic future where quality matters more than quantity.

Our tax proposals matter because they are not merely tax cuts but a broader attempt to build a different kind of economy for Malta—one that rewards effort, strengthens independence, improves quality of life, and creates long-term sustainability for future generations.