Issue link: https://maltatoday.uberflip.com/i/1528842
maltatoday | SUNDAY • 3 NOVEMBER 2024 5 INTERVIEW The following are excerpts from the interview. The full interview can be found on maltatoday.com.mt as well as our Facebook and Spotify pages. PHOTOS: JAMES BIANCHI / MALTA TODAY The primary measure of this budget was the income tax cut. This measure alone will cost the government €140 million. However, according to financial estimates, the government will still collect more from income tax next year compared to this year – specifically, €85 million more. How will this happen? Over the past years, the government has seen a significant improvement in its income from tax revenue, which mainly comes from two primary sources – employees and the self-employed, and companies, referred to as corporate tax. This revenue is the result of two factors. Firstly, economic growth makes it possible to generate more wealth, which then leads to higher income and taxes. Secondly, the government is continuing its efforts to collect the tax revenue that it is owed. So, these two factors together are enabling a consistent year-over- year increase in government revenue. However, for next year, this increase will be at a slower rate than the past two to three years due to the planned tax cuts. The Labour Party's electoral manifesto for 2022 mentioned reducing the corporate tax rate from 35% to 25%. We now have almost two years left in this legislature - when can we expect this reduction? Two points need to be addressed before we get there. Currently, discussions are ongoing with the European Commission regarding the so-called pillar on the minimum level of taxation. This is a minimum tax of 15% that has been globally accepted. Our country has 700 companies that are affected by this plan. We are discussing with the European Commission what kind of qualified refundable tax credits can be offered to these companies on the taxes they pay. This way, the amount might be able to decrease a little. The second thing I want to ensure is better tax collection. The amount of taxes that were previously not collected is now being collected more effectively, but I want to be certain that what needs to be collected is indeed collected. Once I'm reassured about that, then I can also work towards what I mentioned about reducing corporate tax... I want to see this country maintain the necessary income. I am not ready to jeopardise the sustainability of the country's finances in an attempt to make any changes before other matters are in place. I will move on to another measure in the budget that seems to have created some anxiety among people – spe- cifically the issue of pensions and the misinformation that has circulated. Although the retirement age will not in- crease, anyone born in 1976 or later will still have to work an additional year to accumulate enough contributions. Not necessarily, and I will explain why. At no point in my speech did I say that the retirement age would increase to more than 65 years. There has been a change in the required number of contributions; instead of 41 years, it will now be 42 years. […] The whole issue is to ensure more sustainability in pensions. People are living longer, and as life expectancy increases, the age at which people stop working is also going up. We are saying that the necessary time period for contributions is increasing, and we must ensure that the income in the government pension system remains stable. According to the advice from the Pensions Strategy Working Group, the required number of contributions must now be 42 years. You can still have a full pension; one can retire at 65 or earlier if they have made 42 years of contributions. After June's election results, do you believe the Labour Party is nearing its expiration date? I have been working within the Labour Party since I was 14 years old. I remember losing the election in 1998, and after that, I wanted to start contributing to this party. That aspiration was coming from an ideal and an idea. The idea was that this party, as a big movement, can bring about change in the country. Perhaps in recent months and years, I have appeared quite negative because I've criticised my government, my party, on the need to change our direction. I said this even in today's interview. I do this because I remember being in Opposition when I was younger. People were scared to call themselves Labour supporters. I wasn't scared then, and I'm not scared now to share my thoughts. I do this because I believe in a Labour Party that can continue to bring about change. I believe that when this party believes in something, and that belief can be communicated, you can convince people. But you have to be convinced yourself. They said Labour won't work; people were afraid of us because perhaps their past experiences were that when the Labour Party was in government, work decreased, and we worked hard to change the fabric of the country regarding the labour market. The same applies to the issues we just spoke about. If we fully believe we can bring about change, we need to be convinced and believe wholeheartedly. That change certainly can come, but we must make it happen ourselves; no one else will do it for us.