PN proposes amending tax bands, introduction of skills wallet

The Nationalist Party has announced a range of personal tax reforms that would involve reforming tax bands, removing stamp duty when it comes to inheriting immobile property and the introduction of a skills wallet with funds for workers to spend on training.

PN Leader Alex Borg announced more electoral proposal on Thursday. He said that the last time the tax ceilings were moved was under a PN administration in 2012.

Costs are rising, he said, but the tax system despite being revised never became aligned, Mr Borg added, saying that the tax bands are today, expired.

The PN Leader said his party is proposing a just and more modern tax system, which reflects today’s realities. He revealed six proposals.

The proposals

The PN’s first proposal is to reform the personal income tax bands in a way which, Mr Borg said, benefits workers, self-employed and pensioners. “This will mean reduction in tax for everyone.” This tax band reform will cost the government between €110 million and €130 million per year.

Secondly, in order for the Cost of Living Adjustment not the be taxed each year, he proposes that all tax bands increase by the same amount as the COLA.

Thirdly, the PN is proposing removing tax on the first €10,000 earned through part-time work and overtime work.

The party’s fourth proposal is to introduce an incentive for host families, that is Maltese families hosting foreign students. He said that income from this would be free, and also said that when a parent stops working to take care of the home and the students, they will be given NI credits for up to three years.

The party’s fifth proposal is for the creation of a digital skills wallet, which would include €1,000 every three years for Maltese people aged between 18 and the retirement age, that will be use for training and work courses. The aim, he said, is to incentivise the skilling, reskilling and upskilling of workers to keep up with technological advances, such as AI, automation etc. People themselves would be able to select the courses they want to undertake from the strategic national skills registry.

The party’s sixth proposal, Mr Borg said, is to remove stamp duty from inherited immobile property, remove succession tax on family businesses that are inherited, and to remove tax on the donation of immobile property. This is estimated to cost around €45 million to €55 million per year.

Tax band threshold details

PN MP Adrian Delia provided details about how the personal income tax bands would be changed. He said that while today earnings over €60,000 are taxed at 3 per cent. This band would be raised so that earnings over €80,000 would be taxed at 35 per cent instead.

The amount of income that is untaxed will rise, and so will the ceilings of the other bands.

Currently, the first €12,000 a worker earns is not taxed, he said. For a single person, the PN is proposing that the amount untaxed would rise to €15,000.

For a married couple without children, the current amount untaxed is the first €15,000 he said, and the PN is proposing that this rise to the first €19,000.

Couples with a single child currently pay no tax on income up to €17,500, Mr Delia said. He said that the PN is proposing this rise to €25,000.

Couples married with two or more children currently pay no tax up to €22,500, he said the PN plans to increase this to €41,000.

For those with three children or more, Mr Delia said the PN would change the bands so that they would pay a fixed rate of 15 per cent on income between €41,000 and €80,000.

A single parent or custodian with a single child currently pays no tax up to €14,500, the PN is proposing it rise to €20,000.

A single parent or custodian with two children today pays no tax on €15,500, the PN wants to increase it to €35,000.

Other tax brackets

He said all brackets will rise.

A single person’s 15 per cent income tax bracket is currently up to €16,000, he said. The PN is proposing that this rise to €20,000.

For a married couple without children, the top end of the 15 per cent tax band would rise from €23,000 to €26,000, he said.

For a married couple with one child, it would rise from €26,500, to €37,000.

For a married couple with two children, it would rise from €32,500 to €55,000.

For a single parent or custodian with a single child, it would rise from €21,000 to €32,000.

For a single parent or custodian with two children, it would rise from €25,500 to €48,000.

The 25 per cent bracket will be adjusted proportionately, he said.

Savings examples

Mr Delia said that a person earning €30,000 a year on the single computation would save €100 a month, on the married couple computation would save €122.92 each month, on the parent with one child computation would save €143.75 a month, and on the parent with 2 children computation would save €181.25 a month.

As another example he said that for those earning €50,000 a year, a person on the single computation would save €100 a month, on the married couple computation would save €181.25 each month, on the parent with one child computation would save €160.42 a month, and on the parent with 2 children computation would save €193.75 a month.

For a parent with three children or more, on an income of €30,000 they would save €181.25 a month, on income of €50,000 would save €410 per month, on income of €60,000 would save €493.75 per month, on income of €80,000 would save €827.08 per month, he said.

Lastly, Mr Delia gave an example for persons earning €80,000 a year. On the single computation, a person would save €237.50 per month. A married couple with a child would save €181.25 per month, a single parent with a child would save €327.08 per month. A single parent with two children would save €560.42 per month.

In terms of whether all the proposals are affordable, Mr Delia said that the party started its campaign not by saying what it would give, but how the economic engine would be turned, “new economic sectors that will bring in hundreds of millions of euros over a period of a few years.”