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Prime Minister and Minister of Finance Dr. Lawrence Gonzi presented the Budget speech on Wednesday. Among the most prominent measures, is the revision of tax bands.
The 20% and 30% income tax rates have been eliminated for both single persons and couples who pay income tax. These measures are set to benefit single persons who earn between Lm 3,251 and Lm 5,500 and Lm 8,000 and married couples who earn between Lm 4,501 and Lm 8,000.
On the other hand, the Prime Minister also said that the cost of living increase will stand at Lm 2.25c, unchanged from last year, with employees receiving Lm 1.75c as well as Lm0.50c granted last year after the introduction of the fuel surcharge last year.
Dr. Gonzi also announced that this economic progress has also led to clear indications that it is evermore likely that Malta will join the Euro currency on the 1st of January 2006.
It was also announced that national insurance on part-time employment will be of 10% instead of the sum of Lm5.79c per week.
Speaking in Parliament, Prime Minister Dr. Lawrence Gonzi said that the government also has plans to open more routes for low cost airlines to fly to Malta. Additionally, departure tax will stand at Lm 10 as from June 2007, after a number of financial goals were reached in the recent months.
Dr. Gonzi also spoke of the introduction of an energy benefit set to alleviate burdens on families in difficult financial situations. Around 17,000 families will be allocated this benefit. It will be calculated in a way which will neutralize the impact of the surcharge on a basis of average consumption of the family and according to the number of family members set to benefit from the scheme. The benefit will be in voucher form and will be redeemable when the family’s water and electricity bill is paid.
In turn the Prime Minister also stated that as from 1st November 2006, energy efficient appliances such as tumble driers, fridges, dishwashers, freezers, washing machines and air conditioning systems will be subsidized by 20% of the cost price. The subsidy will not exceed Lm 50.
Speaking about widow's and widower's pensions, The Prime Minister said that as from the 1st of January 2007, widows and widowers will remain entitled to their pension even if they decide to remarry. The pension will continue to be granted throughout the first five years of remarriage.
It was also announced that Gozo’s Budget allocation for 2007 will be of Lm29 million, Lm2.4million more over last year’s sum. License fees for accommodation and catering will be reduced so that the Island will be able to develop further. On the other hand, through Budget 2007, The Maltese islands will have around Lm50.4 million in structural and cohesion funds from the European Union (EU). Another Lm 33.6 million will be granted to Malta under the Agricultural Fund.
Prime Minister Gonzi also said that the government will also permit parents to deduct Lm400 from taxable income to do well for expenses carried out in childcare services. In cases where employees pay their employer for childcare services, the expenses incurred will be considered as enterprise expenses and will not be deducted from the taxable income. When an employee received payment from his employer for expenses related to childcare, this payment shall no longer be considered as a fringe benefit in the hands of the employee and will therefore not be subject to taxation.
It was also announced by the Prime Minister that as from 1st January the deductible taxation amount payable on private school fees will increase. Taxation on primary school education will increase form Lm 200 to Lm 300, while taxation on secondary school education will go up by Lm 200 for Lm 400 to Lm 600 per student.
Through the law of Securitisation, Dr. Gonzi said that the government will also set up a Lm 20 million fund which is to pay persons who sold land to the government and have not received their due payment yet.
At the end of his speech, Prime Minister Dr. Lawrence Gonzi said “This Budget, as last year’s, did not increase taxes. It has taken a step forward with taxation adjustments on employed persons to award workers. This budget will strengthen participation of women in Maltese society. It is a budget that will benefit all Maltese families”.
• Compensation for the cost of living will be of Lm 2.25c
• Revision in tax bands for married couples as well as single persons.
• Departure tax will be of Lm 10 as from 1st June 2007.
• Plans to open more routes for low cost airlines to fly to Malta.
• Introduction of energy benefit in form of voucher to alleviate burdens of families in difficult financial situations.
• Subsidies on energy efficient appliances as from 1st November 2006.
• Lm20 million fund to see to pending payments for persons who sold land to government.
• Increase in tax rebates on fees of private primary and secondary education.
Read more about this year's budget on MaltaMedia's special feature: Malta Budget 2007.
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