Manifesto analysis: How the parties want to tax you

The parties aim to lower taxes indirectly.

The Labour Party will be widening the tax bands, while the Nationalist Party will offer tax credits.

Athletes and artists will enjoy lower taxes under the PN at 5%, but only the Labour Party is promising to offer the tax refund cheques.

How will you be taxed under the Labour Party?

Under a Labour government, single persons will not have to pay tax on the first €10,800 they earn in a year. Married persons will not pay tax on the first €14,400, and for parents this applies to their first €12,200 earned.

For the elderly, Labour will increase the ceiling on non-taxable pension by €3,600 for single computation and €5,000 for married computation. This ceiling will be increased from €2,500 to €4,000 for elderly people who opt to reside in a private elderly care home. This measure will also apply for people with a disability residing in a private home.

Part-timers will continue to be taxed 10%, as promised in last year’s Budget. Same goes for overtime income earned by workers in non-managerial positions whose income doesn’t exceed €20,000.

The Labour Party will keep the same 7.5% tax rate for people working in sports. These include players, licensed coaches and athletes, as well as workers in sports organisations, referees, and game officials. Artists will also keep their 7.5% income tax.

Authors and co-authors will see their tax on royalties lowered from 15% to 7.5%, on part with athletes and artists.

The Labour Party will increase the tax reduction measure from €100 to €300 a year for parents who send their children to sports, arts, and cultural activities. For parents who don’t pay tax because of low income, they will receive the same amount in the form of a grant, valued at a maximum €300.

Foreign professionals eligible for the Highly Qualified Persons Scheme and who opt to work in Gozo will be exempt from paying any tax on the first €30,000 they earn in a year.

Labour’s flagship tax refund measure will continue through the next legislature. Married persons earning a maximum €28,700, single persons earning maximum €19,500 a year, and parents earning maximum €21,200 a year will receive a tax refund up to a maximum €165.

The Labour Party will lower the tax rate for companies from 35% to 25% on the first €250,000 profits. The tax on share transfers will drop from 5% to 1.5%.

Companies will receive a full tax refund on the tax paid on investments to their operations. Businesses investing in research and innovation will benefit from a 150% tax reduction on related expenses. Tax refunds on contributions from private organisations to the cultural sector will increase from 150% to 200%.

On a social level, the Labour Party pledges to assist businesses that subsidize the cost of childcare for their employees through tax reductions of up to € 35,000.

Labour also intends on “starting a process” whereby capital gains tax becomes more competitive, “both for Maltese companies and other foreign companies that choose to operate in Malta”. However, the party doesn’t commit to a tax rate, or whether the capital gains tax will indeed be lowered over the coming five years.

A lower tax will be adopted for hotel and accommodation operators, equivalent to 30% of the costs incurred in making new investments on in renovating their accommodation.

How will you be taxed under the Nationalist Party?

Whoever earns less than €20,000 will be given a 10% tax credit on the tax paid the year before. For those earning between €20,000 to €40,000, a 5% tax credit will be given on the amount of tax paid the year before.

Those earning between €40,001 and €60,000 will be given a 3% tax credit on the amount paid the year before. For the €60,001 and €80,000 tax credit, the income tax rate will be 25%.

Students or workers under 21 years old earning less than 60% of the national median income level will be exempt from paying social security contributions.

Athletes and coaches, and anyone who opts for a full-time sports career, will enjoy a 5% tax rate on their first €80,000 income. Professional artists will benefit from a 5% tax rate on the first €80,000 income too.

For pensioners with investments through rent, interest or dividend will be taxed 5% on their first €20,000 derived from these investments. The second €20,000 will be taxed at 7.5%.

Parents will benefit from a scheme whereby they can have any education fees, extracurricular activities expenses, as well as sports fees, deducted from their taxable income.

A bunch of tax credits will be available for students enrolled in undergrad diploma, bachelor’s degrees, a higher education. They will be applicable for those studying while working (lifelong learning) as well as international students travelling to Malta to continue their higher education in Maltese institutions

All company tax arrears accumulated during the pandemic can be paid back over an 8-year period so long as the company conforms to ESG criteria.

ESG-compliant companies will enjoy a 15% tax rate on the first €500,000 profits kept in the company. Meanwhile, over a five-year period, the PN will lower the highest tax rate to 25% for companies and individuals.

They’ve pledged not to raise any VAT, social security, or income tax rates throughout the legislature.

For restaurants and bars, the PN will lower the VAT rate to 7%.

All forms of tax on business transfers, mergers or acquisitions will be removed for all companies that comply with the party’s Environmental Social Governance (ESG) criteria. This includes tax on share transfers, and the transfer tax on the inheritance of shares in companies from parents to children.

How will you be taxed under ADPD?

ADPD have no specific measures on tax, but state categorically that Malta should not base its economic growth on tax evasion from other countries.

However, ADPD does call for the complete removal of VAT on feminine hygiene products.