Issue link: https://maltatoday.uberflip.com/i/205575
4 Budget 2014 BUDGET AT A GLANCE INVESTING IN INFRASTRUCTURE • €453millioninacapitalinfrastructuralprogramme • €15millionforthestrengtheningofAirMalta'scapitalbase • €11.7millionforthecontinuationoftertiaryeducationprojects. REDUCING INCOME TAX FOR HIGH-EARNERS • Income Tax for those earning between €19,501 and €60,000 willdecreasefrom32%to29%. REDUCING THE TAX FOR THE MIDDLE-CLASS • Extension of the parent's tax band from €9,300 to €9,800. Parentswillsave€75peryear. REDUCING THE TAX FOR PART-TIMERS • The15%taxlimitwillincreasefrom€7,000to€10,000. NO INCOME TAX FOR MINIMUM WAGE EARNERS AND PENSIONERS • Thelimitof€8,950willincreasesoastoincludetheCOLA. • Suchanincentivewillbeextendedtopensionersaswell. REDUCING THE TAX FOR PART-TIME FOOTBALLERS AND REMOVAL OF TAX ON INCOME FROM SALES IN AUCTIONS • Income Tax for part-time footballers will decrease from to 7.5%. • Notaxonincomefromsalesinauctions. • Theinterestpayableondutiesfromdeathtaxeswillnotexceed theamountofdutyowed. WITHHOLDING TAX ON RENT • Anyonewhohasincomefromtherentalofresidentialproperty willhavethechoicetoapplyafinalwithholdingtaxof15%on rentalincome,calculatedongrossrentalincome. EXEMPTION OF DUTY FOR FIRST-TIME BUYERS • Aone-timeconcessionontheremovalofthe3.5%dutypayable onthefirst€150,000ofthevalueofahouse. • Theywillonlyhavetopay5%dutyonthevalueofthehouse above€150,000. REMOVAL OF GOVERNMENT ARCHITECT'S VALUATION • Thegovernmentwillstartacceptingthevaluationmadeuponby anyprivatearchitectbutnewsafeguardswillbeintroducedso noabusetakesplace. SIMPLIFICATION OF VAT • As part of the merger between the departments for taxation, newamendmentswillsimplifyvariousprovisosintheVATand Income Tax laws, of which the government hopes to simplify operationalaspects. TAX EVASION • Thelawwillbeamendedsoastoensurethatthosewhocommit the crime for the second time, the Court will have the option to either send the person to prison or else impose a fine of €2,000. • VAT will be paid by those who buy a service related to the property sector and are not in a position to substantiate the estimateoftheworkthathasbeencarriedout. INVESTMENT REGISTRATION SCHEME • Individuals who regularise undeclared investments and cash willbeabletododosobypayingafine. LEVEL PLAYING FIELD FOR BUSINESS • A new online system to be able to report any irregularities by foreignindividualswhoworkinMaltawillbeimplemented. ELECTRICITY TO BE CUT BY 25%, WATER BY 25% • In March 2014, the electoral promise that the electricity and waterbillswillbereducedby25%and5%respectivelywillbe implemented. PRICE STABILITY • Petrol, Diesel and gas prices will remain unchanged until the endofDecember2013. MALTA OIL AND GAS CORPORATION • This new corporation will be established so as to assess the Government'splansforgasandoilexploration. ALTERNATIVE ENERGY • Untiltheendof2014theGovernmentwillreachthetargetof3% ofenergygeneratedbyalternativestofossilfuels. PILOT PROJECT: INTELLIGENT LIGHTING • A €2.8 million pilot project in Gozo and 12km in Malta, cofinanced by European funds, will change the present street lighteningintoonethatconsumeless,arelong-lastingandare abletoperformthedimmingeffect. RETRO-FITTING ON BUILDINGS • Public buildings consume approximately 40% of the energy generated. As a result, several initiatives will take place to ensurethatpublicbuildingsareself-sufficient. VOLUNTARY ENERGY AUDIT • Freeadviceforfamilieswhodemandcounselonhowtomake useofenergyefficientmeasures. SUBSIDY FOR THE INSTALLATION OF SOLAR WATER HEATERS • €500,000forfamiliessoastoinstallsolarwaterheatersanddo maltatoday, TUESDAY, 5 NOVEMBER 2013 Making wor Edward Scicluna's Budget 2014 provides so called 'expansionary' measures that reduces taxes on part-time employment and for middleincome earners, while angling for one-off revenues from the citizenship sale and investment registration scheme MATTHEW VELLA JAMES DEBONO MIRIAM DALLI JURGEN BALZAN JAMES PISCOPO JEROME CARUANA CILIA Fiscal measures No new taxes introduced, but the rate of excise on cigarettes, tobacco, fuel, beer and alcohol and on oil bunkering has been raised. All excise tax starts as of today, while fuel excise is increased on 1 January 2014. The only difference is that the price of diesel will not be increased because the government has negotiated stable pricing for the January-March period – which would have meant six months of price stability on diesel since September 2013. The government is also negotiating on the price of petrol, which will rise by 1c from January 2014. Car licences will be increased for cars with large engines, but the licences for smaller cars registered from 2009 and with carbon emissions of between 0 and 100g will not be affected. €21.4 million in revenue from these excise duties and taxes is estimated to be generated. Infrastructural investment Capital expenditure will be increasing by €66 million over last year's budget, bringing up total spending earmarked on capital projects to €453 million. The sum excludes €15 million that will be paid for the capital strengthening of national airline Air Malta. The expenditure also includes projects that have already been started, such as €11.7 million for the continuation of University and MCAST campuses, and the subvention to the Foundation for Tomorrow's Schools. €2.5 million will be spent on a Marsa sports complex and new football and waterpolo facilities in Birzebbugia. €96.4 million and €59 million respectively will go for infrastructural and environmental spending, and an increased allocation will go into road-building. Another €48.5 million will go for various economic sectors – unidentified in the Budget speech. Finance Minister Edward Scicluna (left) and Speaker Anglu Farrugia (right) Another €20.7 million will go in energy and water investment, while health will see an increase of €60.8 million in investment, as compared to last year's €52 million. Income tax rates Edward Scicluna set much store in announcing that income tax cuts, mainly aimed at the middle-class, would take place without having to wait for the last year of a legislature. As expected, the top 32% tax rate for those who earn less than €60,000 will be reduced to 29% for single, married and parent computation. This will cost the exchequer €13.2 million. Tax on income from dividends will be taxed at the previous rates (pre-2012 rates) to ensure sustainable revenues from income tax. The parent tax rate will see taxable income raised from €9,300 to €9,800, leaving €75 in tax savings – a cost of €1.8 million to the exchequer. Additionally, parent tax rates will also be widened so as to include parents whose children are 23 years of age (up from 21 years of age), which will cover children who are attending University, MCAST and ITS. There will be no tax on minimum wage, with the current limit of €8,950 increase so that it covers the Cost Of Living Adjustment (COLA) rate. No income tax for pensioners whose only source of income – pensions – is not higher than minimum wage. Part-time work Tax will be decreased for part-time works: the limit will increase from €7,000 to €10,000 in the case of a parttime employment and taxed at 15%; and to €12,000 in the case of parttimers who are self-employed, again taxed at 15%. In a bid to encourage employers to declare employees who are employed on a part-time venture or business, a self-employed part-timer who employs up to a maximum of two part- time employees will not lose the 15% tax rate. The current system does not permit the owners of part-time businesses to employ people when expanding their business, making it difficult for them to leave their full-time employment. This system intends to allow those in full-time employment to make the shift to being self-employed at a full-time basis and start a business. Pensioners who retain a self-employed business on a part-time basis will also be eligible for a 15% tax rate on their income, if this is not higher than the minimum income on which they pay social security contributions. Tax for footballers A new concept will be a 7.5% income tax rate for footballers. Scicluna said that in a bid to introduce more professionalism in sport, a 7.5% tax rate on the incomes of footballers was being introduced. The ministry held discussions with the Malta Football Association, and due to the introduction of new international rules on footballers, the income tax rate should encourage the declaration of salaries in the football leagues. "We want to ensure conformity and give incentives to those who choose professional football, and we are hoping that with the help of the MFA, football clubs will confirm and enter the legitimate economy." Taxes on duty and transfer The tax on the sale of goods by auction will be removed; while the interest payable on duties from death taxes will not exceed the amount of duty owed – heirs will save money since interest payable on duties on inheritance taxes in the case of death, is not capped and can exceed the amount of duty payable. Withholding tax on rent The government said it wants to in-