Malta could pocket an extra €344 million a year through a new tax on the wealthiest 0.5% and a clampdown on tax evasion, a study by the Greens/EFA Group in the European Parliament has suggested.
The study’s authors say the levy as well as income from ending ‘tax abuse’, could fund the country’s entire transport budget or a third of its health spending.
They assessed the potential that the introduction of a moderate progressive tax of between 1.7% and 3.5% on the super-rich could have if introduced by EU member states.
Simulations of the potential revenues that countries could garner from a potential tax were built from data obtained by the World Inequality Database and following the model of the Spanish solidarity tax introduced earlier this year.
Based on this data, the report projected that Malta could add €43 million to the public budget through the implementation of a moderate progressive wealth tax, which would roughly correspond to 0.25% of the country’s GDP.
By ending tax abuse from wealthy individuals who hide their money in secrecy jurisdictions, the report estimated that Malta could also recover another €301 million in tax revenue.
The Greens said that €344 million in additional tax revenue would amount to 2.04% of GDP and would be enough to cover some 72% of the energy affordability measures recently introduced by the government, increase its education budget by 42% or cover some 34% of the country’s health spending.
“Malta’s entire transport budget could be paid by the additional revenues. €344 million represents 18 times the budget for the unemployed. If the money recovered in Malta were to be entirely invested into housing development, it could pay for all current investments and extend them by a factor of 24,” the report said.
If that additional tax revenue were to be redistributed directly to the people, every household in Malta would receive a cheque of €1,689, more than twice the amount needed to cover an average household’s yearly energy spend.
“Alternatively, every citizen above 14 years could have 326 cappuccinos each year, which would be nearly one cappuccino every day,” they said.
Ralph Cassar, general secretary of ADPD – The Green Party, said that establishing a progressive wealth tax across the EU could help establish better tax justice in the region.
“In a time where public services are under pressure and working people struggle to make ends meet, a moderate progressive wealth tax of between 1.7 and 3.5% on the super-rich 0.5% of the population, as well ending tax abuse of wealthy individuals who hide their fortunes in secrecy jurisdictions, Malta could raise €344 million,” Cassar said.
“This could push Malta firmly into an era of renewable energy and finance the greening of housing stock, green public transport and alternative mobility projects.
“Hoarded wealth and so-called tax avoidance in secrecy jurisdictions do not contribute to the wellbeing of society. What’s more, income from actual work is taxed while the wealthiest individuals are able to ‘store’ their wealth in assets to avoid fair taxation. A wealth tax all over the EU will help establish tax justice.”
The report said that the existing tax systems in the EU create opportunities for the super-rich to engage in “international tax abuse”, allowing tax dodgers to impede governments from collecting tax revenues generated from capital gains, primarily through the use of secretive jurisdictions to shield their wealth.
A progressive wealth tax, they said could seek a reasonable contribution from the top 0.5% of the wealthiest individuals in the EU. This would only apply to an individual’s net wealth above the 0.5% threshold, leaving any assets below that threshold untouched.