Malta has higher reliance on indirect tax than EU

The composition of the Maltese tax burden shows a considerably higher reliance on indirect taxes than the EU-15 average, the National Statistics Office said yesterday.

In 2001, indirect taxes made up 43.9 per cent of the total tax revenue, compared to a 33.7 per cent share in the EU.

On the other hand, revenues from social security contributions made up 22.4 per cent of the tax revenue, compared to a 31.4 per cent share in the EU-15.

Relatively speaking, total tax revenues in Malta make up a considerably lower percentage of the GDP. In 2001 the total tax burden amounted to 32.6 per cent of the GDP whereas the EU average amounted to 41.1 per cent.

Last year, the overall tax burden in Malta stood at 33.6 per cent of GDP and amounted to Lm564.1 million. The tax burden includes the total amount of taxes and compulsory actual social security contributions.

Indirect taxes were the most important sub-division, amounting to 42.5 per cent of the total tax revenues. Direct taxes and social contributions accounted for 36.1 per cent and 21.4 per cent respectively.

In 1990, the total tax revenue made up 59.8 per cent of the government's recurrent revenue. By 2002 this share had increased to 78.4 per cent.

The percentage share of the three major sub-divisions (indirect and direct taxes and social contributions) has by and large remained consistent over the 13-year period analysed by the NSO.

"Actually the only marginal developments relate to corporate income tax, which accounted for 13.1 per cent in 2002, from a percentage share of 10 in 1990," it said. This increase was offset by a reduction in the share of capital taxes.