An increase in tax collection has resulted in Malta’s public purse registering a surplus of €235m in February, according to an economic update report published by the Central Bank on Friday.

This marks an increase of almost €250 million since the previous year when the government’s consolidated fund registered a deficit of €14.4m.

According to the Central Bank, Malta's surplus is driven by an increase in government revenue, which shot up by 58.5% “mainly on the back of an increase in tax revenue”.

The government's overall revenue in the first two months of 2023 was of just over €992 million, up from €756million in 2022. 

Revenue from both direct and indirect taxes has increased, with income tax revenue growing by almost €145 million. Meanwhile, higher VAT collection has driven indirect tax revenue up to €240 million, €38 million more than the same time last year.

VAT collection alone has grown from €206 million in the first two months of 2022 to almost €238 million over the same period in 2023, an 15% increase.

Malta’s tax collection problem

Finance Minister Clyde Caruana has frequently spoken about the need to combat tax evasion, admitting in an interview with Times of Malta last September that there is some truth to Malta’s reputation as “a nation of tax dodgers”.

Caruana has also argued that the government is owed €5 billion in tax arrears and called for tax defaulters to be excluded from public procurement.

In 2021, the Economic Policy Department estimated that VAT evasion costs Malta €120m a year.

Government expenditure also down

The government’s surplus is also driven by a slight decline in its recurrent expenditure, which decreased by just over €17 million in February 2023 compared to the same month last year.

Nonetheless, the government’s total expenditure over the first two months of 2023 was almost 5% - or just over €41 - higher than it was over the same period in 2022.

National debt now over €9 billion

The Central Bank report also highlights that the government’s debt has continued to climb up, reaching €9.2 billion in February 2023.

This is an increase of almost €378 million over the previous month.

The report attributes this to “new issues of Malta Government Stocks and, to a lower extent, a rise in outstanding Treasury bills”.

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.