Maltese Tax Rates To Remain On Hold

by Robert Lee, Tax-News.com, London

10 August 2005

The Maltese government is not expecting to increase taxation in the upcoming budget for 2005/2006, according to Parliamentary Secretary Tonio Fenech.

In an interview with the Maltese Times, Mr Fenech stated that there has been a "good turnaround" in the government's finances, with the deficit cut by Lm17 million (US$49 million) in the twelve month period to July 2005. The government is also planning to save an additional Lm3 million through cuts in the public sector wage bill.

"We are not looking at increasing taxes and we have to counteract this by further reduction in government expenditure," Mr Fenech told the paper.

However, by the same token, it appears unlikely that the government will be attempting to cut taxation in the near future as it sets about reducing next year's projected deficit to Lm52 million from Lm76 million.

"We will be able to contain next year's budget if things continue going as they are - with better enforcement, better economic growth and reduction in expenditure. I hope that there will be certain sectors where we can reduce (taxation)," Mr Fenech noted.

Nonetheless, he hinted that certain fiscal incentives may be directed towards the property sector and self-employed individuals.

Last month, Prime Minister Lawrence Gonzi launched a pre-budget consultation document that aims set out the government's economic and fiscal goals for the next five years. The document proposed a number of new initiatives to boost Malta's competitiveness, including the setting up of a Task Force to review how the country's taxation system can be engineered to help Malta achieve better rates of economic growth.

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