Income tax cut will be backdated to January 1

When Parliament convenes for business on April 8, the Government will move an almost unedited version of Budget 2013 presented by the previous administration, except for a tweak to ensure minimum wage earners do not pay income tax.

A spokesman for the Government said the Budget measure lowering the highest income tax bracket from 35 per cent to 32 per cent will be retained and backdated to January 1.

Although the new Labour government’s Cabinet is larger than the previous one as it has more ministries and parliamentary secretariats, this is not expected to change the previous government’s budget estimates by much.

“The Budget 2013 will include the same estimates except for the reclassification of the expenditure by the ministries now in place. These are not expected to change the overall estimates,” the Government’s spokesman said.

According to an analysis conducted by The Times, Dr Muscat’s Cabinet is the largest and most expensive in Malta’s history. It will cost around €32 million more for the whole five-year legislature than the one appointed by Lawrence Gonzi in 2008.

With a team of 23, comprising the Prime Minister, 14 ministers and eight parliamentary secretaries, the cost of running the administration will rise from €9 million to €15.4 million a year, an annual increase of more than €6 million.

The spokesman confirmed that during the April 8 sitting of Parliament, when the Budget is expected to be moved, Finance Minister Edward Scicluna will not re-read the speech, which had taken then finance minister Tonio Fenech three hours to deliver last December.

Instead, Prof. Scicluna will present the Government’s overall economic vision.

The Budget 2013 was voted down on December 10 when maverick former Nationalist MP Franco Debono stuck to his word and voted with the Opposition against it, forcing an election.

Prime Minister Joseph Muscat, at the time Opposition Leader, had vowed to keep the framework of this Budget, to be implemented in the first year of a new legislature.

The income tax rate of 35 per cent is to be reduced for annual incomes of less than €60,000 and will be further cut to 29 per cent and 25 per cent in 2014 and 2015 respectively.

Between 2013 and 2015, a person earning €45,000 will save €3,000 in tax cuts while a person earning €60,000 will save an estimated €7,200.