Labour Party pledges personal tax cuts, lowering of corporate tax rate to 25%

The Labour Party is promising widening the tax bands, the continuation of tax rebates and reducing the highest corporate tax rate to 25% if re-elected to government

Prime Minister Robert Abela (centre) with Ministers Silvio Schembri (left) and Clyde Caruana (Photo: PL)
Prime Minister Robert Abela (centre) with Ministers Silvio Schembri (left) and Clyde Caruana (Photo: PL)

Taxpayers will see the non-taxable portion of their income increase by €1,700 as part of tax savings proposed by the Labour Party on the second day of the electoral campaign.

For parents, the first €12,200 of income earned will not be subject to income tax - up from the previous €10,500. Single persons will not be taxed on the first €10,800, while married persons will not be taxed on their first €14,400 income for the year.

The measure would see €60 million more being left in people's pockets.

The pledge was announced by PL leader Robert Abela on Tuesday morning, accompanied by Cyde Caruana and Silvio Schembri.

“If Malta and Gozo entrust me with my first mandate, we will lower income tax by widening the tax bands,” Abela said, adding this was possible because the economy was on a sound footing.

A new Labour government will also continue to dish out the annual tax refund cheques for those earning less than €60,000, an injection of €24 million per year.

The PL is also proposing lowering the corporate tax rate to 25%, down from the current 35% rate, on the first €250,000 profits earned in the year.

Economy Minister Silvio Schembri explained that the proposal will help companies save up to €25,000 - equivalent to a “basic pay” for two workers in a small hotel business.

Caruana said the proposals will be implemented gradually throughout the legislature. "We will not wait for the last year of the legislature to implement our promises but will do so gradually over the span of five years."

During the press conference, Abela confirmed that the tax refund cheques for this year mentioned in the budget and the additional €100 to €200 cheques to stave off inflation, announced just before the election campaign kicked off, will be posted before the election date.

“We need to help people now because of inflation and not postpone the assistance,” Abela said.

Last month, the government said workers and students will be receiving €100 cheques while pensioners will receive €200 as part of a cash injection to make good for inflation. This is over and above the tax refunds announced in the Budget, ranging from €60 to €145.