Caruana takes PN to task over COLA tax: ‘They create two classes of workers’
Finance minister says Opposition unable to explain implications of removal of income tax on COLA increments, PN argues Labour is attempting to sow division on simple proposal
Finance minister Clyde Caruana has taken to task the PN’s insistence that annual increases mandated by the government under the Cost of Living Allowance, can be untaxed, saying the proposal creates “two classes of earners”.
Caruana claims that by removing income tax on the COLA, the weekly salary increase mandated every single Budget by law, only workers not covered by a collective agreement would benefit from the untaxed portion.
Since COLA is not passed on to the salaries of workers under negotiated collective agreements – public or private – which already have annual salary increases factored in, this group of workers would not benefit the same as earners whose COLA is untaxed.
“The PN’s sole proposal for Budget 2025 has caught it off-guard,” said the Labour Party in a statement on the face-off between Caruana and his Nationalist counterpart, Graham Bencini, on One TV’s Awla.
“It’s clear that the PN has not considered the way thousands of workers who are organised under a collective agreement, which is the entire public sector, would not benefit from a cut on income tax on the COLA increase,” Caruana said. “Bernard Grech wants these workers to continue to be taxed in full.”
Caruana defended his budget tax cuts, which widened the 25% tax band for a large swathe of earners. “They are the biggest tax cuts our country has ever seen and from which all workers will benefit equally and without any exception. The PN’s proposal l only means creating discrimination between workers in our country.”
On Awla, Bencini said the PN’s proposal only concerned workers who receive COLA increases, and said that any other proposals for workers under a collective agreement would be addressed “before the next general election.”
Caruana hit back saying this admission betrayed the PN’s rushed proposal to remove tax on COLA without considering workers who are already under a collective agreement.
On its part, the PN today said Labour had shown arrogance by insisting on taxing COLA, despite the fact that this proposal was supported by all unions and employer associations.
“Instead of listening to those who understand the challenges of the rise in cost of living, Robert Abela wants to continue robbing the people,” the PN said.
“Abela continues to insist he is right and everyone else is wrong. This insensitive attitude is not only damaging for Maltese and Gozitan families, who are already feeling the burden of price hikes, but it also clearly shows that neither Abela nor the Labour Party have any genuine interest in people’s well-being.
“The attack on Bernard Grech and the PN for believing the tax on COLA should be removed is nothing less than an attempt to deviate from the truth. The PN has always been clear that this measure is direct support for all workers who are struggling with these price increases.
“If Robert Abela truly leads a workers’ government, as he claims, he should start by removing the tax on the cost of living adjustment,” the PN said.