Issue link: https://maltatoday.uberflip.com/i/1482478
10 maltatoday | TUESDAY • 25 OCTOBER 2022 BUDGET2023 A reduction in income tax across the board was not possi- ble at this time, because of in- ternational developments, but government remains commit- ted to introduce an income tax cut when suitable, the finance minister said on Monday. While announcing the gov- ernment's budget for 2023, Clyde Caruana said that the need to provide certainty and stability in order to protect families and businesses in the fairest and most sustainable way meant that the govern- ment had to put off a planned cut in income tax and focus on other priorities. "The fiscal and economic measures we introduce today must make sense with the con- text of our economy," he said. "Where we are introducing tax credits in this budget, we are doing so on particular activi- ties, reflecting our principles in favour of families and busi- nesses investing in sustainabil- ity and digitalisation." Caruana said that, in 2023, the Maltese economy is forecast to grow by 3.5 % in real terms, and 7.3 % in nominal terms, Domestic demand is expect- ed to contribute 2.5 percent- age points, while net exports are expected to contribute only 0.9 percentage points to growth. Private consumption is ex- pected to grow more moder- ately by 4.0 %. And despite a projected increase in borrow- ing costs, investment is antic- ipated to grow by 5.9 % in 2023. The external environment is expected to deteriorate signif- icantly in 2023, as the shortage of energy supply in Europe is expected to lead to a long- term inflationary environment, leading to tighter financial conditions, which will dampen growth. This slowdown in the global economy is anticipated to re- sult in a contraction in exports, which are expected to grow at a slower rate of 2.5 %, supported by a continuation of the recov- ery in tourism and growth in exports of other services. Imports are forecast to grow moderately at 2.0 %, in line with a slowdown in external economic activity, although supported by a recovery in in- vestment. Caruana said that govern- ment is projecting a 3.4 % in- crease in employment in 2023, while the unemployment level is expected to remain relatively low at 3.1 %. Inflation is expected to ease at 3.7 % as increases in food and services prices are expected to persist, but at a more moderate rate. The minister said that the need for government to inter- vene and support economic growth remains prevalent amid the uncertain international economic climate. Income tax reduction put off because of international developments Tax relief and strategy on market for migrant labour PUBLIC FINANCES TAXES & MIGRANT LABOUR CLYDE Caruana on Mon- day said the government will launch a consultation process to build a national policy for migrants in the economy, in a bid to introduce sensible poli- cies in the field of third-coun- try nationals. Among these measures will be strengthening analytical market research capacity, to fa- cilitate through technology the temporary and cyclical needs of both workers and employ- ers; and assess business neeeds and required skills the market is currently unable to fill. Tax refunds granted in recent years will be issued yet again, with a cheque of €60-140, with the highest refunds granted to those with the lowest income – 250,000 will benefit from the €26 million measure. The last budget had improved workers' wages with a reduc- tion in part-time tax from 15% to 10%, and a 15% overtime tax on the first €10,000. Tax relief for active pensioners Around 20% of pensioners' income will no longer be cal- culated as tax revenue in 2022, while for next year the amount ignored for tax purposes will increase to 40% - a €27 mil- lion measure that will benefit 17,000 pensioners. In-Work Benefit for atypical- time workers Workers whose basic pay does not exceed €20,000 who work atypical times in the ac- commodation and food servic- es sectors, administrative and support services, manufactur- ing, transport and storage, and wholesale and retail, will re- ceive a grant of €150. This measure will be extend- ed to next year, with a €150 cheque. Reduction in income tax for authors and co-authors Tax on income received by authors and co-authors from royalties on sales of their books was last year reduced to 15% - this will now be halved to 7.5%. COLA for government work- ers, private contractors A €10 million spend will take place for COLA on govern- ment workers with collective agreements. Private sector workers al- so partly under a government contract will take the full in- crease in COLA, another €3 million spend. Minimum wage The MCESD is conducting discussions related to the min- imum wage within the Low Wage Commission to find a common position for the coun- try that benefits both workers and businesses. Work-Life Balance Paternity leave has already increased from one or two days to 10 days paid, with two months' parental leave for each parent paid at the rate of sick- ness benefit. In addition, unpaid leave of five days has been introduced for carers of a relative or house- hold who needs medical care. A study on a review and harmo- nisation of Wage Regulation Orders will also be initiated. COMPUTATION: SINGLE Revenue 2023 € 0 — € 15,000 € 125 € 15,001 — € 30,000 € 95 € 30,001 — € 59,999 € 60 COMPUTATION: SPOUSES Revenue 2023 € 0 — € 20,000 € 140 € 20,001 — € 40,000 € 110 € 40,001 — € 59,999 € 65 COMPUTATION: PARENT Revenue 2023 € 0 — € 15,000 € 135 € 15,001 — € 30,000 € 105 € 30,001 — € 59,999 € 60