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Updated: Minimum wage sparks off new row

Gonzi admits rise will affect tax

Prime Minister Lawrence Gonzi made his comments after a visit to the Foster Clark’s premises in San Gwann where he was accompanied by Finance Minister Tonio Fenech. Photo: Matthew Mirabelli

Prime Minister Lawrence Gonzi made his comments after a visit to the Foster Clark’s premises in San Gwann where he was accompanied by Finance Minister Tonio Fenech. Photo: Matthew Mirabelli

Prime Minister Lawrence Gonzi yesterday admitted that single people earning the minimum wage will end up paying tax on their gross income due to changes introduced in the Budget.

His comments differed from those he gave on Wednesday evening when he was asked about minimum wage earners by Labour media journalists during the press conference immediately after the Budget’s reading.

Asked by a Labour reporter whether he was aware that this Budget would cause minimum wage earners to be taxed, Dr Gonzi had said: “No, I do not know that those on minimum wage will be taxed, with income tax, if you are referring to income tax.

“To the contrary, the income tax, rate for those who earn minimum wage, will not be affected... zero.”

In a statement this afternoon, the Finance Ministry denied that Mr Fenech’s comments were different to what the Prime Minister had said.

The minister, the ministry said, confirmed what the Prime Minister said that the minimum wage was not taxable and it was only other income that was. This situation had not changed in the budget for 2013.

People on the minimum wage also enjoyed other benefits such as a higher children’s allowance and higher stipends for their children who were following educational courses or training.

Calculations by The Times yesterday confirmed the claim by Labour leader Joseph Muscat that single minimum wage earners will now enter the first taxable bracket of income due to this Budget’s cost-of-living adjustment in wages of €4.08 per week.

This measure raises the weekly pay of a minimum wage earner from €158 (€8,222 annually) to €162 (€8,433 annually).

When taking into consideration the Government bonuses given automatically during the year, single people who earn only the minimum wage will now end up forking out €60 in income tax annually.

When questioned by The Times yesterday, Dr Gonzi denied that this was an oversight, saying minimum wage earners were still zero rated if one excluded the bonuses.

“No, no... The facts are what they are. If you take the basic minimum wage, which is, by the way, the wage on which you calculate your pension, they are zero rated... They do not exceed the threshold for payment of tax.

“If you add the bonus, those who are single, unlike those who are married or parents, would end up paying tax. But that is if you count their other income (the statutory bonus),” he told The Times after a visit to the Foster Clark’s premises in San Ġwann.

Asked if this made sense in the spirit of a Budget that reduces income tax for those who earn up to €60,000, Dr Gonzi said it made sense when considering that in 2007, 2008 and 2009, tax thresholds were raised for people in low income brackets.

“You need to put everything into context... all the income tax benefits we’ve implemented in 2007, 2008 and 2009, which meant a big advantage for them.

“They have been enjoying this benefit for five years now so the benefit is multiplied by five,” he said.“What I find extremely strange is that having faced five years of criticism not having implemented our electoral pledge (to lower the top rate), once we start to implement it I get criticised just the same.

“Well, typical Labour politics in this island,” he added.

The Labour Party yesterday held a press conference to say it planned to reverse the situation where minimum wage earners on single computation were charged income tax.

MP Owen Bonnici and Labour candidate Edward Zammit Lewis pointed out that the minimum wage had now risen to €8,945, due to the cost of living increase and the statutory bonuses, exceeding the €8,500 non-taxable threshold.

Dr Bonnici said the Labour Party disagreed with this tax and it was therefore analysing the options to redress this issue, including the possibility of raising the threshold.

Still, the Finance Ministry issued a statement last night admonishing Labour for “repeating its mistake”. It insisted the minimum wage would not be taxed.

Without acknowledging the effect of statutory bonuses, the ministry said the minimum wage had increased to €8,433, and was still outside the taxable threshold.

“This shows that the argument of the Opposition leader, who said the minimum wage was being taxed, is incorrect,” the ministry said, adding that “other income” that exceeds this amount would be taxed like any other income.

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Charles Grixti

Dec 1st 2012, 17:13

Single people always get the short end of the stick. They do not burdern the system as much or the planet, work all their lives and their taxes go to those that create the world's problems with their voracious consumption and overrated and spoiled spawn.

Robert Agius

Dec 2nd 2012, 07:45

Had they done so, who would have built your house, how would you drive to work without, who would clean up the mess and rubbish on the streets by the supposedly educated? Such arrogance is only possible when you get others to do it, many foreign and illegal, to pay them peanuts. Then you get the same arrogant people complaining about these foreigners. The irony and hypocrisy of it all.

Robert Agius

Dec 2nd 2012, 07:49

Oh really, so tell me, who exactly do let's say, many lawyers and magistrates, most politicians, people who inherited their parents wealth and jobs, and vast majority civil servants, merit a reward?

mark borg

Dec 2nd 2012, 10:02

qed tara kemm int nisrami....mela int taf xi storja jkollu kull persuna go hajtu ...min forsi trabba bla omm jew missier u ma kellux min jigwidah jew elf circustanza ohra ,ghalik kellhu l-istss cans go hajtu li jirnexxi bhal min kellu kollox favurih ? missek tisthi tikkumenta kumment insensitiv bhal dan ...mortx titqarben illum wkoll ??

matthew tanti

Dec 2nd 2012, 10:31

mark borg: what i did is none of your business. i said "probably" to cater for the exceptions - what i said applies to most cases

Dominic Chircop

Dec 3rd 2012, 09:03

Matthew Tanti,

Dan l-argument sibtu minn xi Summa Theologica ?? Bħal xejn ma tqisx ruħek bħala kattoliku ferventi ! Demokrazija Kristjana ta' taħt fuq !!!

Charles Muscat

Dec 1st 2012, 06:10

Mela e4.08 fil gimgha xinuma?

James Grech

Dec 1st 2012, 12:49

Actually its not E4.08 but E2.93 per week that minimum wage earners will be getting. Minister Fenech has already stated that they will have to fork out E60 from their income because this falls under a higher tax band.

Aristide Galea

Dec 2nd 2012, 13:41

Sur Muscat , dawk il €4.08 huma kumpens għall għoli tal-ħajja u mhux zieda fil-paga minima . Tant hu hekk , li dawn jittieħdu min kull ħaddiem ieħor , ikun fuq liema skala ta' salarju jkun . Tkunx ipokrita bħall-Prim Ministru u l-bella kumpanija u ammettu li f '25 sena QATT u nerġa ngħid QATT ma zidtu il-paga minima ħlief biz-zieda ta' l-għoli tal-ħajja .

Alexander Pace Gouder.

Nov 30th 2012, 18:37

Well you are correct. But this time it seems to be a different case and situation. This time there is a question? Will the Budget go through? and again what will happen if it does not when taxes are already in force as you said the next day of Budget presentation??????? That is my main question.

Ronnie Callus

Nov 30th 2012, 18:04

Exactly so Josef. Apart from this one has to keep in mind that a number who are making a lot of money from their profession do not declare the full amount and also VAT receipts are not given to the clients. At one time Dr.Gonzi had to do the bench marks for each profession but never materialised. The more they got the more they are given.Is this Social Justice with us taxpayers from our wage.

Robert Agius

Dec 2nd 2012, 07:55

Yes, as you said - They are protesting abroad, and rightly so. Now, amount aside, can you please enlighten me on how taxing the lowest earners and reducing the tax of high earners just? Or could it be a case, quite common on this hypocritical island, were - I'm OK(-ish), so screw you Jack...

Eddy Privitera

Nov 30th 2012, 17:51

Joseph Borg: Din tista tkun mossa elettorali, halli meta tersaq aktar l-elezzjoni il-gvern jghati MAHFRA forsi jigbor ftot voti ohra ! Stennihom dawn il-kummiedji !!

Mr F J Brincat

Nov 30th 2012, 16:15

Well if these people are dying of hunger and thirst put your hands in your pocket and give them 60 Euros.

J Caruana

Nov 30th 2012, 16:51

Thanks! It's a big joke...just EUR60 a YEAR (16 cents a day!)...for this you get free healthcare, free road lights, free security services (police, fire bregade etc), social benefits and more!

Oliver Grech

Nov 30th 2012, 17:08

@ J Caruana.

Well said indeed. Not to mention that they would get taxed Eur60 because this governement throughout this legislation has given them several increases in wage.

Doris Sarlo

Nov 30th 2012, 17:36

Matthew Tanti, you must be one of those people whose income tax has been reduced! Shame on this government that charges income tax to minimum wage earners! For workers on the minimum wage making ends meet is very difficult! It is not just a miserable 60 Euro as you disdainfully claim!

matthew tanti

Dec 1st 2012, 07:15

your comments are insult to those in real need.

Robert Agius

Dec 2nd 2012, 07:59

HAAHAHAHAHAAHA, Funny, people are dying of hunger and some people are earning up to 60K and getting a tax break. But in that case, you think there is nothing to complain about 'people are actually dying of hunger and thirst and you are complaining about a miserable 60 euros!'. You must have lost your brain somewhere.

victor bonello

Nov 30th 2012, 16:28

the difference is that those earning the minimum wage are employed and so pay every cent, the problem are the professionals who all declare a basic income, many times far less then what they actually earn.

Charles Caruana Carabez

Nov 30th 2012, 16:29

Social benefits were created in Britain to cater for the poor. It is indeed strange to say that those who pay the least tax, or no tax at all, get equal benefits: the whole idea, in the first place, was to cater for them. I believe it is founded on the principle of solidarity, but that word is meaningless to-day.

Kevin Marks

Nov 30th 2012, 17:54

The argument is that Pl was demonised by PN apologists for proposed minimum wage freeze and Gonzipn reduced it!!Shame

R. Balzan

Nov 30th 2012, 18:07

Is that how they do things in Canada? Good to know.

Robert Agius

Dec 2nd 2012, 08:07

.How about a land reform then. Then I'm sure the minimum earners won't mind paying 60Euro. Naturally, the land belongs to everyone and could be a very useful capital and tool to generate income (taxable too). I wonder who won't be happy with such a proposal....

J Caruana

Nov 30th 2012, 16:46

Int bis-serjeta? Imagina jien naqla minimum wage u niret amount ta flus...u ninvestihom u naqla imaxx fuqom. Habba l-imaxx nibda nhallas taxxa....allura ngerger? Veru ma nafux xigifieri frosta ahna l-Maltin. Mur gibna bhal Grecja, Spanja, Italja, Portugal etc etc?!!!!

Charles Caruana Carabez

Nov 30th 2012, 17:11

@ J. Caruana: Are you playing the fool or are you just foolish? It is the pittance which these people receive as a bonus which pushes them into the taxable bracket. It stands to reason that if one goes from rags to riches one has to pay tax, but no minimum-wage earner has suddenly become a rich man because he receives the bonus. Don't write if you don't grasp the issue!

pat muscat

Nov 30th 2012, 19:17

@J Caruana
Kollha mimmlijin flus l-bank dawk tal-mimimum wage! Din minn fejn gibtha; ghandhom xorti ilahqu mal-hajja! Kemm dmugh tal-kukkudrilli u billboards rajna u smajna f'Settembru fuq l-'friza' tal-minimum wage! Issa aghar ghax mhux interpretazzjonijiet biss imma fatti bit taxxi!

C. Bartoli

Nov 30th 2012, 15:14

@ pat muscat @ the minimum wage thanks to COLA and bonuses will increase from €8,222 to €8,945 an increase of €723 for which they will have to pay €60 in income tax, so all the single persons will still have gained €663. it's a win win situation. So if PL is in power will they put the minimum wage back to €8,222?

George Fenech

Nov 30th 2012, 16:39

Isn't it nice that you pay maintanance for your kids which increase every year after you being taxed on your income and the other part receiving them, who uses them as she pleases isn't taxed a penny on them? Let alone the children allowance and the water/electricity subsidiary?

Ms Maria Vella

Dec 1st 2012, 07:28

Why should you get an allowance just cos you are being responsible and paying towards the well being of your children? It is the least you can do!

VV Bartolo

Nov 30th 2012, 14:59

the cola is given to cover the daily increase of cost of living mr tanti and not to cover the €60 in income tax!!

Jesmond Chetcuti

Nov 30th 2012, 15:55

the cost of living increase is given to compensate for the COST OF LIVING , its not a pay rise, if you have to pay tax on part of it, it means that you haven't got enough to cover the increase in cost of living...to do things right the lower band of income tax should be no less then the minimum wage, and go up accordingly...

Robert Agius

Dec 2nd 2012, 08:11

The point is the ones who need the COLA MOST are the ones who get the least. It this is not a problem for you I seriously think you should have your head checked.

twanny borg

Nov 30th 2012, 15:01

Mr. Scicluna - 500 aktar qed tirreferi ghal gonzi jew? Guvni se jdahhal 500 euro jew 4.8euro fil-gimgha?

Anthony Scicluna

Nov 30th 2012, 16:33

Twanny, the exact figure is 700 Euros more per year. Are you too blinkered to see it?

Chris Coleiro

Nov 30th 2012, 17:15

Actually.. €4.08 x 52 weeks = €212.16

twanny borg

Nov 30th 2012, 15:05

Iva f'dak li huwa taxxi parti mis-salarju. Ghal gid tal-partit gonzi u fenech iridu jitwarbu. Budget suppost tal-elezzjoni ghamlu qassata. Ammetti bhali. Serqu lil fqir biex jaghtu lis-sinjur.

C. Bartoli

Nov 30th 2012, 14:44

Rather than saying minimum wage earners now earn an additional 500 Euros a year, they say they are paying tax of 60 Euros in tax. Let's see, what do I prefer earning 0 and paying 0 tax or earning 500 Euros extra and paying 60 Euros? Very very difficult, Again Labour is confusing everything and everyone. No wonder Mintoff wanted 0 education so that MLP keep control over the masses.

Joseph Borg

Nov 30th 2012, 14:58

Mr C Bartoli
it is you who is confusing people

minimum wage did not increase by Eur700 but only by Eur212.16 which is pretty easy to calculate
Eur4.08 x 52 weeks = Eur212.16.

the Eur8.9k figure you are quoting includes the bonuses while the Eur8.2k you are saying does not include bonuses. when comparing you have to compare like with like,, or is this also a concept you didn't know about?

VV Bartolo

Nov 30th 2012, 14:57

the daily increase in the cost of living mr tanti!!

Eddy Privitera

Nov 30th 2012, 15:43

Matthew Tanti: The problem is that minimum wage earners are not even being allowed to keep all the cost-of-living increase . Something which never happened under Labour !

Anthony Scicluna

Nov 30th 2012, 16:33

@Eddy, sour grapes

Eddy Privitera

Nov 30th 2012, 17:33

Anthony Scicluna You will be eating those "sour grapes" in a few days time !

C. Bartoli

Nov 30th 2012, 14:45

Rather than saying minimum wage earners now earn an additional 500 Euros a year, they say they are paying tax of 60 Euros in tax. Let's see, what do I prefer earning 0 and paying 0 tax or earning 500 Euros extra and paying 60 Euros? Very very difficult, Again Labour is confusing everything and everyone. No wonder Mintoff wanted 0 education so that MLP keep control over the masses.

Kevin Marks

Nov 30th 2012, 18:02

Dear 4.08 X 52 wks = 212.16 not 500 which is mainly already taken by gas and fuel increase who is confusing now? And yes mintoff wanted to take the masses out of Gonzi s uncle control

C. Bartoli

Nov 30th 2012, 14:45

@j brincat the minimum wage thanks to COLA and bonuses will increase from €8,222 to €8,945 an increase of €723 for which they will have to pay €60 in income tax, so all the single persons will still have gained €663. it's a win win situation. So if PL is in power will they put the minimum wage back to €8,222?

anton cassar

Nov 30th 2012, 16:21

C Bartoli......qed tghid ic-cucati...paga minima saret minn Euro 8,222 ghal euro 8,434,zieda ta E 212....Euro 8,945 meta izzid l-Bonus maghha !!

C. Bartoli

Nov 30th 2012, 14:46

bhalma ha mintoff il miljun ewro €1,000000 min halq uliedna minhabba il power station delimara

twanny borg

Nov 30th 2012, 15:21

Kaz differenti siehbi. Wara kollox mhux il-pn tawomlu? Biex nurik it-tradiment mela tawh karozza u mitt haga ohra li hafna ma jafux. Ammetti bhali li din kienet qassata tat-tmexxija tal-partit li se jkollha konsegwenzi li jekk int nazzjonalist ser iggor ukoll. Ara tmurx tivvota ghal fenech ukoll!!!

C. Bartoli

Nov 30th 2012, 16:12

@twanny borg imma xorta accethom + l-affarijiet l-ohra li qed isemmi int. Ma regax taghhom lura lil poplu malti? Allura mhux xorta seraqhom min halq uliedna?

twanny borg

Nov 30th 2012, 16:52

@c. bartoli - taghmilx bhal tal-pl fejn huwa hazin ghid hazin u taghmilx paraguni hziena. tnejn hziena ma jaghmlux wahda tajba. din kienet balbuljata u nammettuha siehbi.

Joe Busuttil

Nov 30th 2012, 13:30

The young lady journalist was more up to date than Gonzipn. Shame.

John Lusignan

Nov 30th 2012, 14:06

Why all this jealousy toward high earners? Give me one good reason why a high earner should pay higher taxes? (Other than your jealous). What additional government services do high earners receive - none of course - to the contrary high earners usually don't make use of government services as they pay for private schooling, private healthcare & have the least government benefits. Robin Hood state!

Jurgeb Gauci

Nov 30th 2012, 13:08

hide the truth? Anyone with some basic arithmetic knowledge could have worked it out.. So please do not make this out to be some hidden lie that has been uncovered.

matthew tanti

Nov 30th 2012, 13:47

you are paying tax because you are earning more!

James Fenech

Nov 30th 2012, 14:15

It is true, the take home pay of people on min wage increased, that is irrelevant to whether they pay tax or not.


But the fact remains that Gonzi can't admit that he made a mistake, even if on an irrelevant matter.

Since when does Government bonus mean "other income"?

R. Azzopardi

Nov 30th 2012, 13:33

What you are suggesting is a gamble, nothing more, nothing less. Rarely does one come out on top when gambling.

A Vella

Nov 30th 2012, 14:58

Steve your comparison doesn't hold.Malta has made huge economic progress in these last years,especially when one sees the competitive advantage gained on our closest competitors.True it may not be felt so much on the streets because the world was in a deep crisis and still is.But here even official statistics are questioned, leaving the electorate at the mercy of the political partys' PR machines

C. Bartoli

Nov 30th 2012, 14:47

@ S Farrugia the minimum wage thanks to COLA and bonuses will increase from €8,222 to €8,945 an increase of €723 for which they will have to pay €60 in income tax, so all the single persons will still have gained €663. it's a win win situation. So if PL is in power will they put the minimum wage back to €8,222?

Aristide Galea

Dec 2nd 2012, 14:33

Mr .C.Bartoli , Your comment couldn't be more stupid because with a simple rise in the tax band will solve the problem .

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