Issue link: https://maltatoday.uberflip.com/i/1541063
NOW that the annual budget has been presented, one can take stock of what is in store for 2026 and be- yond. The budget includes certain valid social and business measures that may help to ease the burdens encountered and to encourage people to invest. However, it must be noted that the fuss made about the decrease in the tax brackets for parents fails to recognise that it is 12 years late. It is evident that this budget was yet another exercise in patch work, a face-saving exercise pre- sented by a populistic government that only cares about appearanc- es and about winning the general elections, which should be around the corner. This budget was more of the mo- notonous same that we have been presented with during these last 12 years by a government that has squandered public funds, robbed the county of its moral and fiscal responsibilities and disfigured the island's environment. Except that this time we witnessed a hysterical minister doing beyond his utmost to sell his unimpressive measures. The budget lacks vision and it does not include any solutions to address the woes that are being faced by low wage earners. Impossible for people earning up to €20k to make ends meet People who earn up to €20,000 per annum are struggling to make ends meet and they are being pushed into poverty. This budget does not address their financial problems in any way. An individual who earns a gross wage up to €20,000 per annum and who applies a Single Tax Rate pays €1,600 in income tax and 10% in National Insurance con- tributions. These deductions total €3,600 (See Table 1). Out of the net disposable income of €16,400, an individual is expect- ed to pay a substantial amount in rental or mortgage costs and in VAT for services and products purchased. During 2021 a two-bedroomed apartment cost circa €650 per month. Now the same apartment costs €1,200 per month, that is €14,400 annually. It is crystal clear that an indi- vidual earning €20K per annum will never be in a position to rent a two-bedroomed apartment, let alone purchase property or raise a family. It is clearly evident that people earning €20K or less, and being left with €567 per month to live on, cannot make ends meet. I dare say that the state is rob- bing low wage earners. The in- crease in the cost of property and rental costs is seriously driving people into poverty. Ironically, Mr Taxman benefits from peoples' difficulties. Every time the cost of property, rental income, services and products increases, the state earns more money in taxation and in VAT. Thus, when a property was sold for €150,000, the state earned €12,000 in tax and €7,500 in stamp duty—a total of €19,500. Now, that same property sells for €300,000 and the state earns €24,000 in tax and €15,000 in stamp duty for a total of €39,000. When the rent of an apartment was €600 per month or €7,200 per annum, the state earned €1,080 in tax. Now, that same property costs €1,200 per month in rent, or €14,400 per annum, and the sate earns €2,160 in income tax. Every time the cost of services and products increases, Mr Tax- man earns more in VAT revenue. A 'socialist' government is driv- ing people into poverty Through its lack of concrete ac- tion to seriously combat the stiff difficulties caused by the spiralling cost of living, government is guilty of driving people into the poverty bracket. Surely, this is not what one expects from a supposedly so- cialist government. This adminis- tration has experienced the largest social divide ever witnessed. The tremendous increase in the cost of property and rental charg- es, together with the substantial increase in the cost of practically all the services and products pur- chased, has not been matched by an equivalent increase in an in- dividual's income. These higher costs have devalued income sub- stantially. The steep increase in the cost of property over the last 50 years has baffled everyone and there are no indications that it is going to sta- bilise. In Table 2 I am reproducing data issued by the UHM a few months ago, and it shows that during the last 50 years the average wage in- creased by a factor of 12 while the cost of an apartment increased by a factor of 50. Whereas during 1975 a person earning an average wage of €2,000 could afford to purchase an apart- ment, it is crystal clear that a per- son who now earns €24,000 is not in a position to purchase an apart- ment. The steep increase in the cost of property and rentals paid has made it practically impossible for people who earn an average wage to pay the rent of a decent apart- ment. People who earn a wage that is lower than the average wage are doomed to rent a room or to share a room or to live in a garage. Solution The only way how we can solve this problem in the long term is by putting an emphasis on mod- ern futuristic education, which will help to encourage and to train people to choose jobs that will pay better wages. Meanwhile, we can help to ease the pressure on low wage earn- ers by decreasing the income tax charged in a determined manner. I admit that last year the tax brack- ets were widened, however the decrease was not at all sufficient to ease the pain caused to low wage earners by the ever increasing costs. I believe tax brackets for peo- ple applying the Single Tax Rate should be changed as shown in Table 3. I propose that the first €20K in- come for people applying a Single Tax Rate should not be taxed. I also propose the introduction of a 20% tax band and that the 35% tax band be applied to an income of over €75K rather than the pres- ent €60K. These adjustments will lead to significant tax saving (see Table 4). The decrease in the income tax charge will leave more disposable money in the hands of individuals and it will help to improve their spending power. It will also en- courage people to strive to earn a better salary. Loss of revenue The decrease in the income tax charge may have a negative impact on the state's revenues. However, this shortfall could eas- ily be recovered by streamlining the size of the uselessly large cab- inet; decreasing the ridiculously high number of persons of trust; increasing government efficien- cy; reorganising the uselessly nu- merous authorities and making Supporting low wage earners Noel Muscat Swieqi mayor and PN candidate 10 maltatoday | WEDNESDAY • 5 NOVEMBER 2025 OPINION Gross income €20,000 Less NI (€2,000) Less income tax (single) (€1,600) Net income €16,400 Less rental costs (€9,600) Net disposable income €6,800 Table 1: Net disposable income for someone earning €20k per annum Year Average wage Cost of apartment Cost of house Cost of villa 1975 €2,000 €6,500 €11,500 €25,000 2025 €24,000 €325,000 €600,000 €2,000,000 Increase x12 x50 x52 x80 Table 2: Change over 50 years Present brackets Proposed brackets Table 3: Changing Single Tax Rate From To Rate From To Rate €0 €12,000 0% €0 €20,000 0% €12,001 €16,000 15% €20,001 €35,000 15% €16,001 €60,000 25% €35,001 €50,000 20% €60,001+ 35% €50,001 €75,000 25% €75,001+ 35%