Media reports that income tax could be cut may be just that, reports, and no more than wishful thinking.

The idea, presented in a business plan on Monday, is just "one of the objectives on a wishful list" of Parliamentary Secretary Edwin Vassallo.

Mr Vassallo was quoted as saying that at the opportune time he will ask the government to consider lowering the tax rate from 35 per cent. Media reports also said that a report before the Malta Council for Economic and Social Development proposed a lowering of the tax rate from 35 to 25 per cent and the introduction of a vacant property tax.

Contacted yesterday Mr Vassallo said there were no commitments on the government's part that income tax would be lowered and emphasised that no discussions had taken place at government level about the matter.

"I was speaking about objectives based on ideas given to us by the commercial sector," Mr Vassallo said. "Reducing tax across the board would increase spending power. It is an objective we are trying to work on. But it can remain a white elephant. Tax reduction is tied to a number of other issues, such as full compliance of VAT. Only then will the government be comfortable to reduce taxes across the board.

"But the issue has to be seen in a wider context. The current aim is deficit reduction and we may agree on many noble issues which may all be secondary to the principal aim and, thus, have to wait."

Mr Vassallo said one of the priorities was fighting the black economy, which is unfairly competing with those who operate above board.

Asked whether his objectives were similar to the ones contained in reports that had to be discussed by the Malta Council for Economic and Social Development, Mr Vassallo said he had had discussions with the commercial sector and it was inevitable that some of his objectives were similar.

Asked for a reaction about the potential tax reduction, the president of the Federation of Industry, Anton Borg, said that as there were no official pronouncements, it was premature to comment at this stage.

"We would want a clear, official statement about it. The FOI has been pressing for a drop in income tax. The matter has not yet been discussed at the MCESD and it is best to discuss the matter internally first."

Labour Party deputy leader Charles Mangion said the issue of competitiveness and economic regeneration were the party's top priorities. "But any suggestion should be considered as part of a larger packet. It is premature to speak before seeing a whole package. Lowering tax is an attractive idea but one has to see on whom the burden will be shifted.

"The MLP has been saying that taxation was affecting the purchasing power and competitiveness. But one has to see if there will be a reduction in taxes or shift of the burden and who is going to suffer or gain.

"Mr Vassallo's statement raises more questions than it answers," Dr Mangion said.

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