Some 2,000 minimum wage earners will be paying about €60 income tax annually from this year, Finance Minister Tonio Fenech has confirmed, though he said this was not a new measure in this Budget.

However, he noted, this began last year when the cost-of-living-allowance raised the minimum wage to the point where single people’s earnings started to exceed the non-taxable threshold when their statutory bonuses were included.

“This is not something new,” he told reporters yesterday, stressing that it did not affect those who filed their income tax return as married couples or parents.

A political argument also ensued over the matter when the Prime Minister at first denied minimum wage earners would be taxed.

“No, I do not know that those on the minimum wage will be taxed... on the contrary, income tax for those who earn a minimum wage will not be affected... zero,” he had said during a press conference immediately after the Budget Speech when questioned by the Labour media.

Labour MP Owen Bonnici, who on Thursday announced that the Opposition was working on proposals to redress the issue, confirmed that minimum wage earners started to be taxed last year, adding that the amount of income tax they would pay had almost doubled.

Asked yesterday why Labour had not brought this matter to light last year, Dr Bonnici said: “Last year there was a smaller amount involved but now things have become more serious.”

“This is about the principle. We would be against it even if one person on the minimum wage was being taxed 1c... With a basic salary of about €700 a month, these people simply should not be taxed,” he said.

This year, matters were exacerbated because when Lawrence Gonzi was asked if he was aware of the matter, he said this was not the case, making it seem that this was an oversight he did not support, Dr Bonnici added.

In a press release yesterday, the Finance Ministry denied reports that Mr Fenech had contradicted what the Prime Minister said on the matter during Dr Gonzi’s press conference.

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