A different tax vision for Malta

As this electoral campaign draws to a close, one thing has become increasingly clear: this election is not simply about competing slogans or isolated promises. It is about two fundamentally different economic visions for Malta.

For years, the country has operated under an economic model driven primarily by rapid expansion, population growth, increased consumption, and continuous government intervention whenever pressures emerge. That model undoubtedly produced strong GDP growth. But it also generated growing pressures on infrastructure, housing affordability, quality of life, and household finances.

Today, many families feel trapped between rising living costs and stagnant purchasing power. Young people struggle to buy property. Small businesses face increasing operational pressures. Workers feel they are working harder simply to maintain the same standard of living.

This is why the Nationalist Party’s (PN) tax proposals during this campaign are not isolated measures. They form part of a broader effort to transition Malta towards a more sustainable economic model – one centred around productivity, stronger families, entrepreneurship, investment in people, and quality growth rather than growth at any cost.

The current government’s response to economic pressures has largely followed one recurring formula: whenever difficulties emerge, distribute more subsidies, bonuses, and state support.

While temporary assistance is sometimes necessary, the Nationalist Party believes Malta cannot continue building an economy increasingly dependent on continuous state intervention. Instead, we believe people should retain more of what they earn and build stronger financial resilience independently. This philosophy lies at the heart of the tax reforms proposed throughout this campaign.

One of the most significant proposals concerns personal income tax reform. The PN has proposed widening all tax bands substantially, with the top 35% tax rate applying only to income above €80,000 instead of the current €60,000 threshold.

This reform addresses a growing problem affecting middle-income earners and professionals across Malta. Many workers who improve their salaries through promotions, overtime, or additional responsibilities quickly find themselves pushed into higher tax brackets, meaning much of the benefit of career progression is immediately absorbed through taxation.

PN believes work, ambition, and professional advancement should be rewarded, not penalised. The reform would strengthen take-home pay for thousands of workers and families, with many expected to save at least €1,200 annually. Importantly, this is not being presented as a temporary electoral bonus, but as a structural reform intended to permanently improve disposable income.

The party also proposed an important reform specifically targeting families with children. Under the proposal, parents with two children would not pay tax on the first €35,000 of income.

This reflects a simple reality: raising a family today has become significantly more expensive. Housing, childcare, education, transport, and everyday living costs continue rising steadily.

The current economic model has placed enormous pressure on family finances. PN believes taxation policy should actively support families rather than simply assume they can absorb continuously rising costs.

The proposals also include annual indexation of tax bands according to the cost of living adjustment (COLA), ensuring that COLA increases are not effectively taxed away through fiscal drag.

While technical, this reform addresses an important injustice within the current system. Workers receive COLA to compensate for inflation, yet part of that increase can be lost through movement into higher tax brackets. By indexing tax bands annually, workers retain the true value of COLA adjustments.

The PN has also proposed exempting the first €10,000 earned from overtime and part-time work from taxation. This proposal is particularly important for middle-income households where many individuals take on additional work simply to cope with rising living costs. Instead of penalising additional effort, PN believes the economy should reward productivity and initiative.

But the tax proposals presented during this campaign go beyond personal taxation. One of the most significant announcements involved VAT reform for small businesses and the hospitality sector. PN proposed reducing VAT for restaurants and kiosks to 7% within the first 100 days of government. This measure is intended to support struggling operators which ultimately benefits consumers too.

The tax proposals go beyond personal taxation- Adrian Delia

The hospitality sector has faced increasing operational costs, labour shortages, and inflationary pressures over recent years.

The PN also proposed doubling the VAT exemption threshold for small enterprises from €35,000 to €70,000 in annual turnover. This reform is particularly important for micro-enterprises, self-employed individuals, and small businesses.

Many operators face disproportionate administrative burdens and compliance costs. By raising the exemption threshold, more businesses would be able to focus on growth rather than excessive bureaucracy.

This reflects another core principle of the party’s economic vision: Malta needs a stronger entrepreneurial economy.

For too long, economic policy has focused excessively on expansion through volume rather than value creation. Small businesses and entrepreneurs remain essential to Malta’s long-term economic sustainability.

PN also proposed substantial reductions in taxation for micro and small enterprises. Under the proposals, the tax rate for micro-enterprises would decrease from 35% to 15%, while small enterprises would see their rate reduced to 25%. These proposals are intended to encourage reinvestment, innovation, and business expansion.

Malta cannot continue depending indefinitely on an economic model built primarily around increasing numbers. The country needs higher productivity, stronger value-added sectors, digital transformation, innovation, and entrepreneurship.

Another major area addressed during the campaign concerns inheritance, succession, and intergenerational wealth. The Nationalist Party proposed abolishing succession tax on inherited family property, family businesses, and property donations from parents to children or grandchildren. This proposal generated significant public debate because it touches directly on questions of fairness, family security, and social mobility. It believes people should not be heavily taxed on assets that families spent decades building through already taxed income. Many middle-class families inherit modest properties or small family businesses and face significant financial burdens during moments already marked by personal loss.

Critics argued such reforms may disproportionately benefit wealthier property owners. However, supporters pointed out that larger property holders often already utilise sophisticated financial structures to minimise taxation, while ordinary families carry the greatest burden under the current system.

The PN’s position is clear: intergenerational effort, family investment, and small family businesses should be protected rather than penalised.

Importantly, these tax proposals are tied to a broader economic vision.

The PN believes Malta must gradually transition away from an economic model excessively dependent on population expansion and short-term consumption. The country requires a model based more strongly on productivity, education, innovation, entrepreneurship, technology, and investment in people.

Tax policy becomes a tool for supporting that transition. Lower and fairer taxation strengthens incentives for work, professional development, entrepreneurship, and investment. It improves competitiveness, supports families, and creates stronger long-term financial resilience.

This is fundamentally different from an economic model increasingly dependent on continuous subsidies and state intervention whenever pressures emerge.

The party is not arguing against social protection. Vulnerable families must always receive support where necessary. But economic policy should ultimately aim to empower people, not create permanent dependence on government assistance.

As this campaign concludes, voters are therefore facing a much deeper choice than individual tax measures alone. The real question is what kind of economy Malta wants to build for the future. An economy based primarily on expansion, state intervention, and short-term management of pressures? Or an economy based on productivity, stronger workers, stronger businesses, stronger families, and sustainable long-term growth? The Nationalist Party believes in the latter.

And the tax reforms proposed throughout this campaign represent an important step towards building that different economic future for Malta.

Adrian Delia is the Nationalist Party’s spokesperson on finance and an electoral candidate on districts 7 and 8.