Gonzi promises tax cuts, incentives for women

Prime Minister Lawrence Gonzi this morning announced an economic stimulus package which includes reductions of income tax and more incentives for women who continue to work.

Dr Gonzi said the economy grew by about 4 percent last year and inflation was still kept at one of the lowest levels in Europe. Nonetheless, in view of the fact that financial turmoil in the US was expected to hit the rest of the world, the IMF had already urged other countries to take fiscal measures as a precaution.

A new Nationalist government, he said, will further widen the tax bands. The minimum taxable income will be raised and subsequent bands will also be widened, and the maximum tax rate of 35 percent will be reduced to 25 percent except for those with a declared income in excess of €60,000 (Lm26,000 approx) who will continue to pay tax at 35 percent.

These measures, Dr Gonzi said, are expected to further boost the economy, to the extent that within two years, the government still expects tax revenue to rise as the economy continues to pick up.

Dr Gonzi said overtime will continue to be taxed as at present, but workers will benefit because of the widened tax bands. This, he said, is widely different from the MLP's proposal, which, he said, will ruin the workers' income from overtime.

Dr Gonzi pointed out that Charles Mangion, opposition spokesman on finance, had clearly told a financial magazine that: "I should suggest that employees, since there is no tax on overtime, would be paid normal rates and not at time and a half." This, therefore, was a carbon copy of the controversial proposal made by President Sarkozy in France, Dr Gonzi said.

He said that another incentive which a new PN government will launch will give women in employment a one year tax break for every child they have.

He said that the proposal announced just over a year ago, whereby women who returned to work after five years would enjoy a one-year tax break had been very successful. Some 1,000 more women are currently working, despite the dismissals from a number of factories.

The new measure, he said, will encourage workers to continue to work.

The new PN government, Dr Gonzi added, would also maintain its stand in the EU to ensure that the Working Time Directive would not cap the number of overtime worked.

Dr Mangion in a press statement this afternoon accused the Prime Minister of ‘manipulating’ the MLP proposal on overtime and said the proposal as approved by the MLP general conference will not affect the what workers are paid for overtime at present.