Call for measures boosting insurance and savings

The Malta Insurance Association has called on the government to further control public spending as an alternative to raising taxes.

It is proposing a concerted drive by the Income Tax Department to bring up to date all outstanding tax assessments dating prior to 1998 and to pay any tax refunds without delay, incorporating a system which allows taxpayers to offset any pre-1998 tax credit against any pre-1998 tax liability.

Among other proposals in view of the upcoming budget for 2005, the association is urging the government to contribute to a programme that encouraged individuals to insure and save for themselves and their family rather than seek reliance on the state.

It also called for a fiscal policy that encouraged people to save and provide for their own retirement.

Contributions to a retirement scheme should be tax-deductible for both employers and employees and interests, dividends and capital gains earned in a retirement fund should be tax-exempt.

However, the annuity payable at retirement should be subject to tax at the individual's marginal rate, the association said.

It is also calling for a change in legislation to enable linked long term insurance policies to be uniformly taxed at 15 per cent like other investment income. Life insurance benefits that are payable following a critical illness or disability should not be taxed.

Another proposal is for a clearer recognition of the complementary roles between private and public financing of healthcare.

A number of measures could encourage private health insurance for those who supplement their social security medical entitlement with a private scheme.

The government, MIA went on, should encourage private healthcare insurance mainly through the setting up of controls on health service providers; introducing tax relief at marginal rates on approved private insurance schemes and setting up common structures for record keeping and communication of medical data between the various health providers, whether private or public.

The minimum duty of Lm5 on non-life insurance business should be abolished. This would mean that non-life insurance business would be taxed at the standard rate of 10 per cent of the annual premium, the association said.