The bud­get and pen­sions Three case stud­ies

Malta Independent - - NEWS -

Asked by The Malta In­de­pen­dent on Sun­day how the pen­sion tweaks from the bud­get af­fected peo­ple on a tan­gi­ble level, the gov­ern­ment pro­vided three real life ex­am­ples of what it is try­ing to achieve along such lines, as fol­lows.

Case 1

John is a re­tired civil ser­vant. He is now a wid­ower. His com­bined pen­sion in­come is €13,000, partly from so­cial se­cu­rity and partly from his trea­sury pen­sion.

Be­fore the changes in tax rates an­nounced in the Bud­get he used to pay €585 in in­come tax.

Next year, his tax bill will fall to €375, a sav­ing of €210 com­pared to this year.

In 2018 his tax bill will fall to 0, mean­ing that he will be €585 bet­ter off.

Case 2

Lawrence and Doris is a pen­sioner cou­ple. They had mi­grated to Aus­tralia, so Lawrence receives a pen­sion from over­seas. To­gether with his Mal­tese pen­sion, this gives them an in­come of €14,000.

Be­fore the changes in tax rates an­nounced in the Bud­get, they used to pay €195 in in­come tax.

Next year their tax bill will fall to €75, a sav­ing of €125 com­pared to this year.

In 2018 their tax bill will fall to 0, mean­ing that they will be €195 bet­ter off.

Lawrence and Doris will also be get­ting an in­cre­ment of €221 in their pen­sion as a re­sult of this Bud­get.

Thus, tak­ing into con­sid­er­a­tion their tax sav­ings and their ben­e­fit in­creases, they will be €416 bet­ter off.

Case 3

Rita

is a widow. Af­ter the changes in the widow’s pen­sion made in last year’s bud­get, her widow’s pen­sion rose from €10,000 to €12,000.

How­ever she had lost part of this in­crease, as her tax bill rose from €135 to €435 as a re­sult of her higher ben­e­fit.

Af­ter the change in tax rates made in this year’s bud­get, this will no longer be the case. Next year, Rita’s tax bill will fall from €435 to €225.

In 2018 Rita will not be pay­ing any tax. This means that com­pared to her po­si­tion two bud­gets ago, her dis­pos­able in­come will have in­creased by €2,135.

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