PM insists tax cuts are sustainable and possible due to strong economy

Prime Minister Joseph Muscat yesterday said he is convinced that the tax cuts he announced on Tuesday as one of the first and main electoral promises for the Labour Party are sustainable because the economy is doing well.

Dr Muscat, accompanied by Finance Minister Edward Scicluna, addressed a press conference to give more details on the electoral promises announced on the first day of the election campaign. Presenting various tax computations, the Prime Minister said that unlike what any are thinking, the government is not on a spending bonanza. “These are sustainable measures. We want our families to be able to spend more,” he said.

The tax cuts do not discriminate between part-timers, full-timers or self-employed. He also explained that these cuts were calculated by individual not by household.

“We need to address labour supply and this is why we need to encourage part-time work,” he said presenting tables of how the system will work.

Persons on a married couple’s tax computation (37,000 people) would receive at least €220 per person per year while those earning the least would get €340 in a bonus per year. Those on a single person’s tax computation would receive between €200 and €300. Those working part time as their main employment and earning up to €9000 will get a bonus of €100. Those on parents’ computation would receive between €220 and €320.

Dr Muscat said married couples both working and earning €17,000 and currently paying €2,000 tax would receive €560 by the end of the next legislature, saving a quarter of their tax.

Persons earning between 30,000 and 40,000 euro would save 460 euro by the end of the legislature, a saving of 4% on their tax.

Government convinced surplus will be kept for coming five years

Finance Minister Edward Scicluna said that the government wants this virtuous cycle to continue. “The country’s economy does not need stimulus because we are doing well. We can afford a tax cut.”

He said that although many might think that the government is basing these cuts on ambitious figures, the government is still aiming at a modest growth of 4%.

Prof Scicluna said that Maltese Tax law does not have corporate tax, meaning that taxation in Malta deals with individuals and families through shareholding.

“We are riding a very big wave. Let’s not break it.”

IIP scheme to be extended after consultation

When asked by The Malta Independent to explain how the government intends to extend the controversial IIP citizenship scheme, the Prime Minister said that once the first phase of the project is exhausted, the government will carry out a consultation process before taking a decision.

“The €700 million investment in road works can be carried out through such funding,” he added.

Bank holidays to be given back gradually

Prime Minister Muscat said that bank holidays will not be given all at once, but given back gradually. Dr Muscat was replying to questions by this newspaper following concerns expressed by the Chamber of Commerce over the sustainability of introducing more holidays.

He said that this process will be accompanied by competitive measures for employees and following more discussion with MCESD.

“There is a huge difference between how the previous government cut off these holidays and the way we are introducing ours,” he said. Dr Muscat believes that such holidays will increase internal tourism and insisted that these measures are all costed and sustainable.