Despite higher taxes, Maltese still pay less

The increase in Malta's tax revenue was the second highest in the EU over the past seven years, although the Maltese still cough up less tax than their EU counterparts.

Eurostat said Malta raised its overall level of taxation by 6.5 per cent between 2000 and 2007 - from 28.2 per cent of GDP to 34.7 per cent.

In 2007, the EU's average tax take, comprising taxation on labour, consumption and capital, stood at 39.8 per cent, 5.1 per cent more than in Malta. The analysis showed that while taxation from labour activities here remained practically the same, and even dropped slightly from 20.6 to 20.1 per cent of GDP, consumption taxes rose by 4.4 per cent (from 15.9 per cent in 2000 to 20.3 per cent in 2007).

Eurostat officials yesterday told The Times there were probably two reasons for the increase in revenue from consumption: an increase in consumption due to higher income levels and the fact that VAT proceeds rose from 15 to 18 per cent in 2005.

On an EU level, Cyprus registered the biggest rise in tax revenue as a percentage of GDP, increasing its take from direct and indirect taxes by 11.6 per cent over the period to reach 41.6 per cent.

Taxpayers in the Nordic EU countries pay the highest amount of taxes, reflecting an excellent social security system. The Danes top the list of European taxpayers, contributing 48.7 per cent of their GDP, followed by their Swedish neighbours where the tax burden stood at 48.3 per cent in 2007. The Maltese pay a top rate of 35 per cent compared to Denmark where the highest earners fork out 59 per cent. Other high income tax jurisdictions include Sweden (56.4 per cent), Belgium (53.7 per cent), The Netherlands (52 per cent), Finland (50.1 per cent) and Austria (50 per cent).

On the other side of the taxation scale, Bulgarians paid the least income tax (10 per cent), followed by Romania (16 per cent). On average, income tax in the EU is higher than in Malta. When it comes to corporate tax (taxation on commercial companies) Malta had the highest statutory corporate tax in the EU.

Eurostat said that at a 35 per cent rate, Malta's taxes on corporate income were almost 10 percentage points higher than the average in the euro area. Other countries currently charging companies high taxes on their profits are France (34.4 per cent) and Belgium (34 per cent). The lowest rates of corporate income tax are found in Bulgaria and Cyprus (both at 10 per cent) and Ireland (12.5 per cent).

In comparison with the rest of the world, the EU27 tax ratio remains generally high, exceeding those of the US and Japan, Europe's main competitors, by some 12 percentage points.