Malta registers big increase in tax burden

Malta registered the second highest tax burden increase among the EU 27 member states over the last decade, according to new Eurostat statistics published yesterday in Brussels.

Data calculating member states' tax revenues as a percentage of GDP between 1996 and 2006 shows that Malta's tax burden rose from 25.4 per cent of GDP in 1996 to 33.8 per cent in 2006.

The only other EU member state which registered a higher increase was Cyprus.

The tax burden in Malta, however, is still lighter than the EU average, which stood at 39.9 per cent of GDP. In fact citizens of the EU's Nordic countries pay far more taxes than Maltese citizens.

Eurostat said that labour taxes (income tax and social contributions) remain the largest sources of tax revenue across the EU and represent almost half of total tax receipts. Consumption taxes, such as VAT, amount to 28 per cent of tax revenues. However, these figures vary from one member state to the other.

In Malta, an average worker ends up paying almost 21.5 per cent of his total income from work in taxes. In Sweden the same worker in 2006 paid more than twice, 44.5 per cent of his earnings. On average, the EU 27 citizens in 2006 paid 34.8 per cent in taxes of all their earnings.

On the other hand, Malta's intake from consumption taxes almost equals those from labour. In 2006, Maltese households paid 19.8 per cent of their total purchases in tax on consumption. The Danes forked out the most on their purchases at 34 per cent.

According to Eurostat's figures, Europe is much more expensive to live in when it comes to taxes when compared to the US and Japan. In fact, EU tax levels remain generally high in comparison with the rest of the world, with the EU 27 tax ratio exceeding those of the United States and Japan by some 12 percentage points.