Over 60,000 full-time workers in Malta are exempt from paying income tax due to earning the minimum wage, information tabled in parliament shows.
The information tabled by finance minister Clyde Caruana sheds light on wage inequality in Malta and the cost of living in the country.
Caruana revealed these figures in response to a parliamentary question posed by Nationalist MP Ivan Castillo.
The minister disclosed that 60,492 workers pay a 0% tax rate, indicative of those earning the minimum wage, approximately €9,100 annually.
A further 44,040 workers are subject to a 15% tax rate, contributing €17.4 million to the government’s coffers.
The most common tax rate among Maltese workers, at 25%, applies to 158,147 individuals, generating a considerable revenue of €666.1 million.
Additionally, 13,582 workers earning above €60,000 annually fall under the 35% tax bracket, contributing €352.4 million to government revenue.
Meanwhile, separate parliamentary inquiries by Castillo unveiled insights into national insurance collections, totalling over €1.5 billion over the past two years.
These revelations underscore the broader economic challenges faced by many in Malta, particularly amid soaring living costs. Despite nominal increases in the minimum wage, the disparity between wage growth and escalating expenses, particularly in property prices, continues to widen.
The recent establishment of a Low Wage Commission by the Maltese government reflects a recognition of these challenges, yet concerns persist regarding the adequacy of wage revisions to address the current economic realities.
Civil society, including the General Workers’ Union, has for long called for substantial wage increases to better align with contemporary living costs, proposing a minimum wage of €286 per week.
Calls for the introduction of a National Living Income (NLI) have also gained momentum, with studies indicating the necessity for higher income thresholds to ensure a meaningful standard of living.
The proposed NLI figures paint a stark picture of the financial strain faced by many Maltese families, with estimates ranging from €14,864 for single individuals to €30,734 for two-parent households with two children. Notably, even the most conservative NLI estimate for a single-adult household without children surpasses the current minimum wage by 30%.
Moreover, while the Maltese minimum wage has seen an average annual increase of 3%, it remains one of the lowest in the European Union. In contrast, the cost of basic necessities such as food and accommodation has far outpaced wage growth, exacerbating financial hardships for many citizens.
In June 2023, the National Statistics Office said that the number of persons living in households with a national equivalised income below the at-risk-of-poverty line – €10,893 – was 85,797.
This translates into an at-risk-of-poverty (ARP) rate of 16.7%, an insignificant decrease of 0.2 percentage points when compared to the previous year.
Moreover, 102,834 individuals are either at risk of poverty, or severely materially and socially deprived, or living in households with very low work intensity.