Second week: PN rebound, tax relief and fat cats

In communication terms, the second week of the election campaign marked a clear recovery for the Nationalist Party (PN) after an opening phase in which it appeared outpaced by the Labour Party’s tightly managed and emotionally targeted strategy.

Labour dominated the early days with a “cradle to grave” approach built around direct benefits and reassurance politics, while the PN initially struggled to articulate a coherent response.

By week two, however, the Opposition had stabilised its campaign, shifting toward a more disciplined, managerial and sector-based approach reminiscent of earlier technocratic PN strategies, adapted to today’s populist political environment.

Historically, while the PN had to shift to the centre left by endorsing Dom Mintoff’s welfare state to become competitive in the 1970s, the party is now fighting on Labour’s own populist terrain, albeit retaining its class bias for higher income earners.

In this sense the more important development is not simply the PN’s mediatic recovery, but its deeper convergence with Labour’s economic model—while subtly reshaping it in favour of higher earners, asset holders and inherited privilege.

 

Inheritance, inequality and protection of accumulated advantage

Building on this tax shift, the clearest ideological signal in the PN programme is its proposal to abolish stamp duty on inherited property and family businesses as well as the tax on family donations.

Alex Borg in reply to a question by MaltaToday called inheritance taxes “an injustice”, insisting it did not make sense for children who inherited their parents to pay taxes once again on the property. “This is an injustice we will redress for all sections of society,” he said.

But while presented as relief for middle-income families and a way of addressing the anxieties of people inheriting a small property who end up facing a tax bill, the measure has far broader structural implications.  It is also worth reminding that under the existing tax regime property inherited directly from a parent is already subject to significant exemptions and reductions.

By removing taxation regardless of estate size, it overwhelmingly benefits larger estates, long-established property holdings and family business structures.

Inheritance is one of the key mechanisms through which inequality is reproduced across generations. When wealth is transferred without fiscal constraint, it compounds over time, allowing advantage to accumulate independently of work or income.

In this way inherited capital will pass between generations with minimal state intervention. This creates a structural imbalance—earnings from work remain subject to taxation, while unearned wealth transfers are progressively shielded.

Even when framed as “family relief”, the largest gains accrue to those inheriting high-value property portfolios, landholdings and business assets.

The risk of this policy is the consolidation of accumulated advantage.

Rather than treating inherited wealth as an object of fiscal balancing, it is increasingly treated as something politically insulated from redistribution.

But Labour is unable to strongly oppose measures that will give higher earners greater advantage or measures that favour inherited wealth without exposing its own positioning.

In recent years, Labour moved toward low-tax, property-friendly policies and broad-based growth distribution, narrowing traditional ideological distinctions between the parties. It has increasingly incorporated property owners, professionals and business interests into its electoral coalition. This constrains its ability to criticise the PN’s trajectory.

The PN, meanwhile, is increasingly defining itself as the political defender of property continuity, inherited capital and intergenerational wealth transfer. Rather than challenging inequality, it is reframing it through the language of family protection and fiscal relief. 

The result is not a contest over redistribution in the traditional sense, but a divergence over fiscal policy within a shared growth framework.

 

PN’s tax cut vs PL’s super bonus

This divergence is reflected in the parties’ respective tax relief proposals.

Labour’s flagship €1,000 annual “super bonus” is universal. It is paid to all workers earning more than an annual €12,000 irrespective of income. Those earning less are eligible for a pro rata €500. Labour’s proposal does not discriminate in favour of low-income earners as its original tax rebate (the famous cheque) did but treats tax contributors equally. The logic is straightforward redistribution through cash transfers, immediately visible in household budgets and politically easy to translate into daily life.

Labour’s advantage is its track record in honouring similar promises in the past. The pitfall is that the measure is being presented as a giveaway that does not discriminate between high and low income earners.

The PN response is structurally different. Its income tax reform focuses on adjusting tax bands rather than direct transfers, raising the 35% threshold from €60,000 to €80,000 and widening lower bands substantially. While presented as middle-class relief, which it is, the effect is skewed toward higher earners, who gain the most in absolute terms. The nature of a progressive tax system always results in greater absolute savings for higher earners when tax bands are adjusted but this time the change in the highest band skews it even further in favour of the top tier.

However, the PN proposal ensures that lower-income households—including those who fall below the taxable threshold—would still receive a €1,200 tax rebate. This means that while the lowest income earners would receive a minimum €1,200 benefit, a parent with one child earning €80,000 would save €3,925 annually, while a parent with two children on the same income would save €6,725. A single person with no children earning €80,000 would still benefit from savings of €2,850.

In other words, Labour’s super bonus extends the same level of income support to all tax payers while, the PN’s proposal leaves more money for everyone but is skewed in favour of higher income earners.

Curiously, while guaranteeing an annual saving of €1,200 for everyone, the PN’s proposal was costed at a net €130 million, while Labour has costed its super bonus proposal at €200 million. The PN costings were questioned by Finance Minister Clyde Caruana, who argued the PN measure was worth at least €360 million. He claimed the costings shortfall put into question the competence of the Opposition. 

The PN disputed the discrepancy with finance spokesperson Adrian Delia saying the minister ignored the government’s own three-year tax relief for parents, which Caruana had costed at €160 million. The parent rate adjustments reach their full potential in 2028.

Furthermore, Delia said the cost of €130 million was a net value after factoring in the money government would claw back—estimated at around €70 million—as a result of increased consumption. Delia was uncompromising in his criticism of Caruana’s critique: “The discrepancy is a figment of the minister’s imagination.”
But even if these figures are taken at face value both the PN and PL’s proposals come at significant cost in terms of monies which the state can use to finance public services and the welfare state, both of which are increasingly financed from proceeds derived from increased revenue generated from economic growth. 

 

Shared economic assumptions, different distributional instincts

Despite some divergences, both parties broadly accept a growth-driven model in which redistribution does not come from structural changes to ownership or capital taxation, but from recycling economic growth through benefits, tax adjustments and subsidies.

The difference lies in emphasis. Labour prioritises immediate, universalised support, while the PN combines similar redistributive language with stronger protections for accumulated wealth and property.

But the PN has also made a greater effort to frame its proposals in a policy framework.

This is visible in the PN’s proposal to cut household utility bills by 30%. While politically appealing, the measure is more complex than Labour’s cash-based approach. It involves abolishing meter rents, adjusting tariff bands, and expanding eco-reductions, all framed within renewable energy investment and system reform.

However, its benefits are less immediate and less uniformly felt, relying instead on structural assumptions about efficiency gains and energy transition savings.

 

A managerial revival, with broader fiscal commitments

The second week also signalled the return of a more managerial PN, focused on projecting competence and sectoral planning through a slicker communications strategy. This was also evident in the way the tax band reform was communicated through an online calculator presented in Maltese and English versions.

This approach is reminiscent of the competence associated with the PN in its hay day both in terms of policy and in campaigning. Campaign messaging increasingly addressed specific voter groups: Pensioners concerned about utility bills, students focused on stipends, and families worried about healthcare and living costs.

This reflects a more disciplined electoral operation than in previous cycles.

At the same time, the PN has adopted a far more expansive fiscal agenda. It is proposing new hospitals, a €5,000 child trust fund, higher stipends, and state-funded parental leave.

It is also positioning itself around emerging sectors such as artificial intelligence, space, the creative economy reflected in the proposed “PORT” project aimed at redeveloping the Marsa docklands into a national theatre and expo centre, and maritime logistics.

This managerial tone has also made the PN look like a more plausible alternative by suggesting sectors from where new growth can be achieved that is less labour intensive.

 

Growth, energy and a structural contradiction

The PN’s development model is most clearly expressed in its proposal for a Mediterranean Maritime Fuel Hub at Hurd’s Bank.

The offshore LNG and bunkering facility, valued at around €450 million in projected activity, is presented not only as an infrastructure project but as an attempt to carve out a new economic niche beyond Malta’s heavy reliance on tourism and construction. It aims to position the country as a regional energy and logistics hub, reducing dependence on existing cyclical sectors and embedding Malta in maritime supply chains.

However, this diversification strategy comes with significant structural risks. It deepens exposure to eastern Mediterranean geopolitical competition over energy routes and infrastructure, tying Malta more closely to hydrocarbon-driven regional dynamics at a time when global policy is shifting towards decarbonisation.

Questions also arise over ownership structures, strategic control of infrastructure, environmental impact and security risks linked to critical energy assets in international maritime space.

But while the PN proposal has been criticised by ADPD and Momentum for embracing hydro-carbon fuels, the PL dared not venture down that road. Just as the PN was announcing its plan, the news emerged that government had awarded oil giant Chevron a licence to carry out a desk-top study of exploratory data in four areas to the south of Malta. Instead, the criticism descended into claims that the PN plan was handed to them by “Malta’s greatest fuel contrabandist”. The allegations were made by the prime minister, who claimed the smuggler had met him and presented the same plan to him, which he discarded. Robert Abela has refused to name the smuggler and refused to report the matter to the police despite being challenged to do so by Alex Borg, who even took an affidavit denying ever meeting any criminals about the PN plan.

 

A contest within one economic order

The second week of the campaign ultimately reveals points of divergence within the current paradigm without really challenging its underlying precepts.

The PN has regained momentum not by proposing a fundamentally different direction, but by refining its strategy within the dominant economic framework—targeted redistribution, new sectors that generate growth and managerial competence.

But it is also reshaping that framework in a more explicit direction—one that reduces taxation on higher income bands while progressively shielding inherited wealth from redistribution.

The result is not a clash of economic systems, but rather a competition between two variations of the same model—one focused on immediate redistribution through state transfers, the other combining managerial planning with a clearer tilt towards protecting higher-income groups and entrenching inherited advantage over time.

The question for Labour now is how to counter the PN’s mediatic rebound. Will it move back to a social justice agenda or is it too comfortable in bed with same fat cats the PN is trying to seduce?