Maltese Economic Development Curtailed By Taxes, Claims Labour Party

by Robert Lee, Tax-News.com, London

05 September 2005

Government figures for the first half of 2005 show that rising tax revenues are due to increased taxation and not rising consumption, and that the country is lagging behind its European Union peers in terms of economic development, the Maltese Labour Party has claimed.

In a statement issued last week, Labour Party deputy leader Charles Mangion stated that the rise in the government's income between January and July 2005 was down to an increase in the rate of value added tax to 18% from 15%. He additionally argued that a rising tax burden is curtailing consumer demand and thus contributing to a general economic slowdown.

“Malta is the country developing at the slowest rate,” Dr. Mangion remarked.

He reinforced his argument by noting that income tax and national insurance receipts grew by only 1% during the period, well below the government's forecast of 4% growth. A rise in government expenditure by 5.4% is compounding the problem further, he added.

According to Dr Mangion, who is also the party's spokesperson for finance and economic affairs, the government has also attempted to massage the figures by omitting a debt of Lm9 million to medical suppliers, and adding one-time income of Lm5 million from the Investment Repatriation Scheme.

"From these calculations, one can find that the state of government finances is much worse than the figures published claimed,” argued Dr Mangion.

"The government is going against a promise made prior to the budget and now it is caught up within its own cheap propaganda," he added.

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