In recent years, the middle class has been at the forefront of policy discussions, but following a leadership change, the focus has largely shifted towards the lower class.

The increase in minimum wage was symbolic but the shortage of measures protecting the middle class might have run the risk of widening the social divide.

With a higher living cost and no incentives to balance, the middle class has been continuously shrinking, triggering higher price caution, with many finding it harder to keep up. The moment our middle class falters, there will be fewer people contributing in taxes and more people becoming dependent on social benefits, placing additional strain on the government resources. That would lead to further suffering by the lower class as well.

Introducing a new tax bracket

The prime minister pledged the biggest tax cut in history by widening the tax brackets as a means to incentivise the middle class in our country. Currently, people who earn between €14,501 and €60,000 all pay 25 per cent tax.

Although our tax system is progressive, and therefore varies proportionally, one must acknowledge that people earning about €14,000 face different challenges than those making €60,000.

Ideally, a new tax bracket is introduced covering earnings from €14,500 to €30,000 taxed at 20 per cent, while the rate for those earning between €30,001 and €70,000 would remain at 25 per cent. Widening the last tax bracket will incentivise people to work more, rather than deterring them due to excessive taxes.

Having a better tax system will give more disposable income, serving as a breather to the middle class while incentivising them.

Who is the middle class?

Maria is a single mum who earns €27,500. She is not considered to be a low-income earner, she earns more than double the minimum wage and exceeds the average salary in Malta.

This marks the first year that the terms ‘middle class’ and ‘budget’ have been mentioned together- Pamela Cann Rodgers

In the eyes of the government and on paper, Maria is considered part of the middle class, living a financially stable life. As a matter of fact, government only gives her the bare minimum of childcare allowance. The benefits she enjoys are less than those who earn below the average salary, yet she struggles to make ends meet, putting her at a disadvantage.

According to a Caritas study conducted in 2024, €30,742 is the amount of money needed for an adult with two dependent children to live a life most of us take for granted, meaning dining out once a month, owning a car, living in unsubsidised rental accommodation, occasionally ordering snacks for home consumption, and pet care.

This is the current situation that our middle class is in. Always at the mercy of life, praying that there will be no unplanned expense.

Inflation has made our money peanuts

There was a time when a pea cake used to sell at 20c, now they cost around 50c. The 50c has become what 20c was five or more years ago. This example can be adapted to all sectors of the economy. Many mention property prices which have doubled, while a  substantial increase in prices can also be felt in restaurants.

According to Warren Buffett, inflation is a cruel tax on people. Government assistance is needed to create that buffer, offsetting inflation in a healthier manner. Rather than giving grants and money to everyone, it would give a breather to those who need it, who are working for their hard-earned money. This is a reality that not many are speaking about because, on paper, the middle class were overlooked too many times.

This marks the first year that the terms ‘middle class’ and ‘budget’ have been mentioned together. It is widely recognised that the middle class constitutes the largest demographic in our society. We can only hope that this budgetary measure will lead to a much-needed shift toward alleviating the challenges faced by our working population.

Pamela Cann Rodgers is a lawyer and PR consultant.