Maltese Government Set To Launch Tax Reform Task Force

by Robert Lee, Tax-News.com, London

30 September 2005

Maltese Prime Minister Dr Lawrence Gonzi told parliament on Wednesday that the government may set up a task force next month to explore options for change in the country's tax system.

The review is part of a five-year strategy announced by Dr Gonzi at the launch of a Pre-Budget Document earlier in the year, designed to improve Malta's overall economic competitiveness.

Replying to a question tabled by Labour Party MP Leo Brincat, Dr Gonzi explained that the government is still considering responses from the public and business groups to a consultation initiated as part of the reform process, and will make a decision on whether to set up the tax task force once these comments have been analysed.

The task force is due to submit its report by June 2006; however, the government is now deliberating whether to push back this deadline in the light of complaints from social partners that this time frame is too tight to consider the possibilities for reform.

According to the Pre-Budget Document, the government is hoping to change the taxation system so that: tax policy stimulates economic growth; the system is re-engineered from direct taxation to environment-related taxation; the regime promotes the uptake of the household rental market through tax incentives; and reporting requirements are further simplified to lower administrative costs.

The Pre-Budget Document is one of three important documents which will guide government action in the coming years, the other two being the National Reform Programme which is intended to address Malta’s competitiveness in terms of the EU’s Lisbon Agenda and the National Strategic Reference Programme, which will outline the strategic priorities for Objective 1 structural funds from the EU for the period 2007-2013.

“The single most underlying priority across this strategy remains competitiveness. Unless we bolster our competitiveness we cannot make a quantum leap in our quality of life," Dr Gonzi announced at the launch of the Pre-Budget Document.

"It is therefore crucial for the country to seriously tackle and take effective measures while allowing the private sector a free and level playing field, with the least possible administrative overheads and with more resources to deploy on productive investments. Similarly, government needs to roll-in and increasingly assume the role of the regulator without ever deserting its social obligations," he added.

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