Issue link: https://maltatoday.uberflip.com/i/1431464
€245 million in tax collection following an MDA proposal BUDGET 2022 MDA welcomes 2022 'social Budget' MDA PRESENTED 13 PROPOSALS IN A PRE-BUDGET CONSULTATION MEETING WITH PRIME MINISTER ROBERT ABELA 10 21 NOVEMBER 2021 I n 2014, on a proposal by the MDA, Government introduced a 15% rent tax. It is a known fact that be- fore this system was intro- duced, the Government col- lected very little on rents. Figures tabled in Parlia- ment, in response to Par- liamentary Question 22179, clearly show how govern- ment income through the rent tax has risen, year on year. In the first year of the sys- tem, the Government raised €5.7 million, which contin- ued to increase year on year to €57.3 million in 2020. is equals to an increase of 1000%. In total, €245 million was collected over seven years in taxes from the rental market which were cer- tainly well used for social projects such as an increase in pensions and infrastruc- ture, such as new roads. is information, released this week in Parliament, is one example of how when a sector such as property is given the opportunity to comply with the law and at sustainable tax rates, both the Government and the people get to gain. e MDA believes that systems where one can comply sustainably rather than through an unsustain- able force, lead to win-win results. T he Malta Developers Asso- ciation was pleased to note that this year's budget was a social one, where once again no taxes were increased and the incentives that were in place were renewed and through which incentives, which were originally implemented at the initiative of the MDA, the government had not only gained more from the taxes, but the people benefited from a healthy investment even during difficult times. Liquidity increases when austerity measures are not taken, and as a consequence of this investment is increased. In the run-up to the Budget. the MDA met the Prime Minister Rob- ert Abela and various Ministers in a pre-budget consultation meet- ing during which the association put forward 13 proposals, most of which were aimed at incentivising a move towards eco-friendly build- ing and best practices in the field. Other proposals centred around renewable energy and education. In this budget, the government recognised the importance of the development and construction in- dustry by renewing the schemes related to the purchase of proper- ty, including first and second-time buyers' schemes, that were also originally proposed by the MDA in the previous legislature, which schemes were extremely beneficial to residents who wanted to become homeowners, while also having a positive impact on the Maltese economy. e MDA has been stressing for years that incentives should be pro- vided for the investor to consider already built, derelict and vacant properties and help in restoring them whist promoting the Maltese character and tradition. erefore, the incentive of tax relief on the sale and purchase of vacant or UCA or traditional style property along with grants for those who do so when buying their first home, has also been very well received. MDA also praises the tax incen- tives for the restorers of these types of buildings with a grant on the val- ue of VAT paid up to a maximum of €54,000 for the first €300,000 in costs of restoration and refining of these properties. is should lead to a beautification of our localities and give an incentive to those who want to invest in the building itself and not just to those who want to invest in land. Other positive steps were incen- tives for owner of properties which were renting at affordable prices, and the creation of a church-state foundation. e MDA had stressed that the creation of a private pub- lic partnership in this sector could also bear fruit. e MDA, although welcoming the government's incentives and proposals in the field of renewable energy as well as those made in view to renewing the green economy, regrets to note that its proposals to incentivise sales and the purchase of properties with the highest envi- ronmental standards and the grad- ual shift to carbon neutrality have not found their place in this year's budget. e MDA feels that these proposals would have helped Malta to meet its environmental targets in a timely manner and therefore urges the government to seriously reconsider whether to adopt them anyway by introducing new meas- ures addressing such, during the year. e MDA's proposals were ulti- mately put forward to reduce taxes for buyers and not for developers, with the intention of moving the market towards one where a high environmental standard would be demanded by the consumers them- selves. e MDA is also pleased to wel- come the overtime rate measure with a 15% reduction on the first € 10,000 income. is was a propos- al made by the MDA this year be- cause workers were opting to work part-time with third parties rather than overtime with their full-time employers, due to the high tax they were incurring. e MDA finally feels that this is a positive and a well distributed budget, that will financially ease the lives of many. MDA congratu- lates the government for the social designed measures, which despite the challenging times caused by the pandemic cost millions to the country, still managed to inject more money into the economy entrusting the people to employ them. Highlights of the 2021 budget include: • No new taxes for a fourth consecutive year. • 50 million worth of vouchers to be spent on hotels, restaurants and retail outlets for all individuals over 16 years of age resident in Malta. • COVID Wage Supplement given to pandemic-affected businesses extended until end of March 2021. • Income tax refund to increase to between €45 and €80 for single people and €50 to €95 for married couples; • Extension of the Second Time Buyers scheme as well an extension of the reduced rate of stamp duty of 1.5% introduced as part of the Economic Regeneration Plan. • Increase of tax refunds for individuals and increased incentives for private pensions. • Applying part of the €2.25bn of European Funds to sustain employment in industries adversely impacted by COVID-19 and to further stimulate economic recovery. • 10-year strategy for tourism and a new state aid application to assist Air Malta. • VAT exempt threshold for businesses to rise to €30,000 from €20,000; • Commitment to green, carbon-neutral and sustainable energy policies. • Prioritising public infrastructure: investment in road networks, industrial clusters, health facilities and schools. • Total revenue from taxes has decreased (compared to initially budgeted figures) by approximately €900 million and government spending has increased by approximately €300 million. • Weekly cost of living adjustment of €1.75 per week. Social security pensions increase by €5.00 weekly. • Vacation leave entitlement increased by one day to total of 28 days. • Introduction of 15% final withholding tax on royalties from literary works. • A €1,000 grant to couples who adopt a child locally. • People hiring a carer to look after a person with a disability are now eligible for a €6,000 yearly grant. • NGOs to be exempt on tax if their income is under €50,000. • Extension and enhancement of reduced stamp duty on donations and property transfers. 2014 2015 2016 2017 2018 2019 2020 Tax collected on property rental € 5,771,866.00 € 9,354,931.00 € 28,260,006.00 € 37,366,335.00 € 50,290,047.00 € 56,693,836.00 € 57,309,152.00