'Lower tax rates will reduce evasion'

FOR.U.M., an umbrella body of eight trade unions, has proposed that tax rates be lowered to reduce tax evasion.

The government should show the political will to solve the tax evasion problem and dedicate more resources to ensuring that everybody paid his dues, FOR.U.M. insisted in its reaction to the pre-Budget document.

FOR.U.M. believes that reducing the income tax rates, especially the top rate, may encourage people to declare more of their income since they would be paying less tax and not running the risk of being caught not paying tax.

This had already been experienced in the past when the top rate was reduced from 65 to 35 per cent and tax revenue actually increased, it said.

FOR.U.M. also pointed to what it believes to be an unjust aspect of the tax regime. Whereas part-time work is generally taxed at a rate of 15 per cent (on the first Lm3,000) so as to encourage people to work and increase the country's productivity, overtime work and part-time work with the same employer is taxed at the normal rates.

With both major political parties and the social partners being against the EU working time directive, there seems to be consensus on achieving increased productivity by part-time and over-time work, the unions noted.

It said this could be done applying a uniform rate of 15 per cent tax for all part-time and overtime work and to remove the arbitrary maximum limit of Lm3,000.

FOR.U.M. consists of the Malta Union of Midwives and Nurses, the Union of Architects and Engineers in the Public Service, the University of Malta Academic Staff Association, the Union of Planning Authority Professionals, the Union of Central Bank Employees, the Airline Pilots Association, the Association of Airline Engineers and the Union of Cabin Crew.