Minimum wage earners will pay tax, Gonzi says

Prime Minister on radio interview says minimum wage earners will breach 15% tax ceiling.

On Wednesday, Lawrence Gonzi appeared unaware that single-computation minimum wage earners will pay some income tax.
On Wednesday, Lawrence Gonzi appeared unaware that single-computation minimum wage earners will pay some income tax.

Prime Minister Lawrence Gonzi has admitted that single people earning minimum wage will be paying tax on their gross incomes, due to the increase from the cost of living adjustment and the government bonus that will push the minimum wage into the taxable bracket.

In an interview on Radju Malta's Ghandi Xi Nghid, Gonzi confirmed claims raised by Labour - which he denied when questioned by the Labour media on Budget night last Wednesday - that a single earner on the new minimum wage of €8,433.88, as bolstered by COLA, will be pushed into the 15% tax band because of the statutory bonus of €512.

The admission confirms what observers feel is an oversight by Tonio Fenech, after both the Nationalists and Labour entered into a political feud over claims that Joseph Muscat would 'freeze' minimum wage.

The PN set much store in claiming Muscat would freeze minimum wage by not supplementing it with the COLA increase, when the Labour leader told supporters at the party congress that raising the national minimum wage would lead to price inflation.

On Wednesday, Gonzi insisted that minimum wage earners will not have to pay tax.

The weekly €4.08 COLA increase raised minimum wage to €8,433 annually - but with the government bonuses, which total €512 annually, single computation taxpayers breach the €8,501 ceiling and will have to pay €60 in income tax.

While Labour has pledged to reverse the situation for minimum wage earners, the party said it will still retain a massive tax cut for high income-earners announced in the budget.

By 2015, an earner on single computation will be paying 25% on a €60,000 income, the same rate as for somebody earning €14,501.

Previously, anybody earning over €19,501 paid 35%. Under the new budget proposal, anyone earning between €19,501 and €60,000 now will pay 32% tax in 2013, 29% in 2014, and 25% in 2015.

The tax cut will benefit small business owners to curtail company dividends that are currently paid at 35%, and instead take home high salaries beneath the €60,000 threshold.

The tax cut was originally an electoral proposal by the PN and one that was also promised by Labour if it was elected to power.

Gonzi defended the decision to cut income tax for high earners. "We gave precedence to lower income-earners in the past," he said of previous budgets that widened tax bands and created a new 25% computation for parents.

"Now that we have finally delivered on the tax cut we are being criticised. I see this as a senseless partisan criticism.... For two years in a row, we reduced the deficit... and now we are honouring the entire electoral programme," Gonzi told presenter Andrew Azzopardi.

"This is our electoral programme for the first year," an upbeat Gonzi said of the budget, while criticising the lack of proposals coming from Labour's side.

Labour leader Joseph Muscat has declared he will not raise minimum wage over and above the annual cost of living adjustment, and has filed a libel suit against the prime minister over claims he made that Muscat was advocating a freeze on minimum wage, akin to the 1983 general wage freeze.

avatar
Just an idea - but maybe if you are a minimum wage earner, you should not be allowed to vote. Think about it for a minute. If you fall into this category, you are not exactly pulling your weight - in fact let's face it - you are a weight on society. And its fair to say that your level of education is not such that your opinion would have much value. If you knew what best to do, you would get started with your own life before you advise others. We would also than avoid sabotaging democracy by politicians selling votes and appealing to the limited intellect of minimum wage earners. In fact a lot of politicians would loose their appeal!! Now you might suggest that maybe not all minimum age workers are uneducated people - maybe there is an aspiring artist in there or students. But then again, one makes choices and sacrifices and if giving up your vote to pursue your muse is one of them - then so be it.
avatar
This is all their fault really. If they had banded together and created a fund to send Tonio Borg to see his football games in a private jet and with a private box at the stadium, Tonio in turn would have been hard at work on his trips to be fully aware of the tax bracket they fall under. This mistake could then have been easily avoid. I mean its not that Tonio himself is on minimum wage - so how the hell do you expect him to know! Honestly, the people in this country expect too much from their politicians.
avatar
I agree with Lupu. It must be a slip on the part of the Tax people advisers. It's not the measly Eur 60 tax that single people would have to pay in 2014, but the fact that they have to pay IT at all. These people have no culture of contributing something to the state coffers. A lot of them are Labour voters anyway, and they have been in inculcated with socialist ideas; the state looks after you from conception to resurrection. Just lie back and take whatever you can from other people's taxes. It's true that the amount is insignificant, just a tiny fraction of what a smoker pays for his fags. However Labour will attack the government with the usual soundbites - PN partit tas-sinjur, povri haddiema etc. PN can easily forego this insignifican amount of revenue and assure the electorate that they would raise the IT treshold in 2013.
avatar
Stenbaħ ħaddiem u terġax tħalli lill dan il-parassita jkompli jerdalek demmek . Hekk sewwa sur par idejn sodi . Min jaqla hafna , jiffranka it-taxxa , u min jaqla il-minimum wage jiġi intaxxat . Erġa afdaħ fil-gvern lill-Gonzi , sur ħaddiem.
avatar
Imlew Malta kollha bil billboards jippruvaw ibellawna GIDBA li Joseph irid jiffriza il Minimum Wage, u ohrog il ghageb, l-ewwel haga li ghamlu fil budget kienet mhux li ziedu l-minimum wage izda ghad-dirittura intaxxawa. Ipokriti bil pedigree.
avatar
No matter what the Prime Minister, or Ministers, or lick-boot apologists say, minimum-wage earners should not pay tax if they rely on their pay and bonus only. This is nothing but one more gaffe from the headless chicken government (small caps intentional) we have been burdened with.
avatar
Tafu tisthu? Fadal zejt fl-uchuh? Kissirtuh il-haddiem. U dan tghidu li ma hawn Awsterita? Daqt toqtlu in nies bil-guh. Issa jekk Alla il-hanin innixxifli ilsieni u terga titla sejjer terga tiehu il 500 ewro fil-gimgha? Mela hekk sew is-sinjur jiffranka u dawk bil-pagi tal-qamel sejrin ihallsu. Sewwa kien John Bundy, Pajjiz tal-Micky Mouse.
avatar
U l-Gahan Malti ikompli jmur icapcap u jippopa sidru f'xi meeting jew taht xi tinda biex juri l-approvazjoni tieghu lejn dawn il-politikanti li qed jassasinaw pajjiz. Kollha kemm huma hsiebhom biex joqghodu tajjeb u liz-zghir jutillizawh ghal-iskopijiet taghhom.
avatar
Anette B Cassar
Din il-Mizura tat-taxxa fuq id-dhul ghal persuni 'single' hija 60 Euro u se tolqot 2,000 ruh. Dhul ghall-Gvern ta' 120,000 Ewro. Il-Gvern setgha ammetta zball u jghamel tajjeb ghal dawn il-flus minn xi festin. Smajt li l-inawgurazzjoni tal-Arriva qamet lill-Kaxxa ta' Malta 80,000 Ewro. Forsi 120, 000 il-gvern ghandu bzonnhom biex jghamel festin ghal-parlament il-gdid.
avatar
These new tax reductions only favour those who earn a considerable amount and are not in the average range which a normal worker or employee gets. This is very unfair. The persons on minimum wage and average wages shall get nothing special out of this budget. It is a well known fact that many high earners might just earn this amount because of their titles or positions and contribute very insignificantly to the economy.
avatar
Anette B Cassar
Din il-Mizura tat-taxxa fuq id-dhul ghal persuni 'single' hija 60 Euro u se tolqot 2,000 ruh. Dhul ghall-Gvern ta' 120,000 Ewro. Il-Gvern setgha ammetta zball u jghamel tajjeb ghal dawn il-flus minn xi festin. Smajt li l-inawgurazzjoni tal-Arriva qamet lill-Kaxxa ta' Malta 80,000 Ewro. Forsi 120, 000 il-gvern ghandu bzonnhom biex jghamel festin ghal-parlament il-gdid.