Updated | Labour insists that minimum-wage earners now hit by 15% income tax

Single-computation minimum-wage earners breach 15% tax band.

Edward Zammit Lewis (left) and Owen Bonnici.
Edward Zammit Lewis (left) and Owen Bonnici.

Minimum-wage earners will be paying income tax as of 2013, because the statutory bonus of €512 payable annually pushes them into the 15% tax band for those who earn over €8,501.

Labour MP Owen Bonnici and candidate Edward Zammit Lewis said single-computation workers on a minimum wage of €8,433.88 - the new wage as bolstered by the annual cost of living adjustment - will be supplemented by the annual government bonus, pushing them into the first tax band.

Yesterday, Prime Minister Lawrence Gonzi appeared unaware that minimum wage earners had jumped into this tax band.

Owen Bonnici replayed clips of Gonzi's statement in the post-budget press conference, saying finance minister Tonio Fenech can be heard speaking over the prime minister's statement admitting that minimum wage-earners will be hit by a tax.

Bonnici was less forthcoming on questions from the press on whether they would address this situation.

"For us it is an important principle that people on minimum wage do not pay tax. The fact that the prime minister doesn't even know that they will be paying tax, concerns us."

Pressed by the media to say whether a Labour government would see that minimum wage earners would not pay income tax, Bonnici and Zammit Lewis gave no direct answer, however insisting that the government had broken a "fundamental principle".

The two candidates for the general elections said that the PL was currently calculating the number of persons affected by this measure and by how much they will affect them before deciding what action to be taken. The two said that increasing the threshold was one of the options a Labour government would be looking into.

Bonnici also said Labour was committed to safeguard any benefits that have been given to people in this year's budget, including tax cuts to high income-earners who will pay 32% on incomes between €19,501 and €60,000.

The government has refuted Labour's claims that minimum wage-earners are being taxed.

"The COLA increase has raised minimum wage to €162.19 per week, which means it is €8,433.88 per year. So no tax is paid on minimum wage... any other income that puts income in the taxable range, will be taxed like any other income."

The finance ministry said that students whose parents are on minimum wage will get €124 every month instead of €83, while university students will get €251 instead of €83.

More in Budget 2013