Taxation in Malta rose from 30% of GDP in 2002 to 33.6% in 2012

● Malta’s still one of lowest in EU

Tax revenue as a percentage of GDP in Malta rose from 30.0% in 2002 to 33.6% in 2012 but is still one of the lowest rates in the EU, figures published by Eurostat show.

The overall tax-to-GDP ratio, meaning the sum of taxes and compulsory social contributions in % of GDP, in the EU28 stood at 39.4% in 2012, up from 38.8% in 2011.

The overall tax ratio in the euro area (EA18) increased to 40.4% in 2012 from 39.5% in 2011.

In 2013, Eurostat estimates show that tax revenues as a percentage of GDP are set to continue rising in both zones.

The tax burden varies significantly between member states, ranging in 2012 from less than 30% of GDP in Lithuania (27.2%), Bulgaria and Latvia (both 27.9%), Romania and Slovakia (both 28.3%) and Ireland (28.7%), to more than 40% of GDP in Denmark (48.1%), Belgium (45.4%), France (45.0%), Sweden (44.2%), Finland (44.1%), Italy (44.0%) and Austria (43.1%). Malta, as stated, had a tax revenue as percentage of GDP of 33.6%.

Between 2011 and 2012, increases in tax-to-GDP ratios of more than 1 percentage point were recorded in Hungary (from 37.3% to 39.2%), Italy (from 42.4% to 44.0%), Greece (from 32.4% to 33.7%), France (from 43.7% to 45.0%), Belgium (from 44.2% to 45.4%) and Luxembourg (from 38.2% to 39.3%), while the largest falls in the ratio were registered in Portugal (from 33.2% to 32.4%), the United Kingdom (from 35.8% to 35.4%) and Slovakia (from 28.6% to 28.3%).

In Malta’s case, the overall tax burden rose from 33.0% in 2011 to 33.6% in 2012.

However, Eurostat figures also show that while Malta has the EU’s second lowest labour tax, this is compensated by expenditure tax (VAT) and even more by tax on capital where Malta has one of the EU’s highest rates.

The largest source of tax revenue in the EU28 is labour taxes, representing more than half of total tax receipts in 2012 (51.0%), followed by consumption taxes (28.5%) and taxes on capital (20.8%).

Labour taxes were the largest source of tax revenue in 2012 in 24 member states, and in 13 member states they accounted for more than half of total tax revenue.

The highest shares of taxation from labour were observed in Sweden (58.6%), The Netherlands (57.5%), Austria (57.4%) and Germany (56.6%).

Only in Bulgaria (32.9%), Malta (34.6%), Cyprus (37.1%) and the United Kingdom (38.9%) was the share below 40%.

Consumption taxes were the largest source of tax revenue in 2012 in four member states: Bulgaria, Croatia, Malta and Romania.

The highest shares of taxation from consumption were recorded in Bulgaria (53.3%), Croatia (49.1%), Romania (45.1%), and Malta (38.8%) and the lowest in Belgium (23.7%), France and Italy (both 24.7%).

Taxes on capital accounted for the smallest share of tax revenue in all member states in 2012.

Shares of more than 25% were registered in Luxembourg (27.5%), the United Kingdom (27.4%), Malta (26.6%) and Cyprus (26.1%) and of less than 10% in Estonia (7.1%) and Slovenia (9.8%).

Eurostat also said that the average implicit tax rate on labour in the EU28 rose from 35.8% in 2011 to 36.1% in 2012.

Among member states, the implicit tax rate on labour in 2012 ranged from 23.3% in Malta, 24.5% in Bulgaria, 25.2% in the United Kingdom and 25.4% in Portugal, to 40.1% in Finland, 41.5% in Austria and 42.8% in Belgium and Italy.

The average implicit tax rate on consumption in the EU28 was stable at 19.9% in both 2011 and 2012. Implicit tax rates on consumption were lowest in 2012 in Spain (14.0%), Greece (16.2%) and Slovakia (16.7%), and highest in Denmark (30.9%), Croatia (29.1%) and Luxembourg (28.9%).