ADPD calls tax-free pension proposals regressive and unfair to workers

ADPD – The Green Party has criticised both the government and the Nationalist Party over proposals to exempt pension income from tax, warning that the plans are regressive, socially unjust, and damaging to Malta’s public finances.

“At present, workers in Malta start paying income tax at rates that can reach 25% on income slightly above €16,000, and 35% on income over and above €60,000. Yet the government is proposing that pension income up to around €37,000 be taxed at zero. This means that individuals with large pensions could pay no tax at all, while workers earning significantly less continue to pay income tax,” said ADPD Chairperson Sandra Gauci.

The party’s criticism follows the government’s proposal to exempt pension income of up to €37,000 from tax.

ADPD said this disproportionately benefits those with very high pensions, including former ministers, former MEPs, and individuals who built up substantial private pension schemes during their careers. 

The Nationalist Party has also proposed that all pensioners be exempt from tax on all their income up to €37,000, regardless of the source of that income or the capital accumulated.

ADPD said both proposals would create two entirely separate categories of people, those who work and pay income tax according to their income, and those with the same or even higher income who pay nothing simply because they are pensioners. 

The party warned that such policies shift the burden onto younger and future generations, who will have to sustain public finances increasingly weakened by what it called irresponsible tax giveaways. It also noted that the national debt has already surpassed €11 billion.

ADPD said it believes social fairness requires a progressive tax system where everyone contributes according to their ability, regardless of whether income comes from work, pensions, or investments, and said it would continue to challenge the imbalances being created by both parties.