An amnesty for people who have fallen behind in their income tax payments has been announced.

Announcing the scheme, Finance Minister Tonio Fenech said that people who had arrears in their income tax payments dating back to 1998 would have a 90 percent reduction on the interest and fines they owed on their dues.

Those who had arrears prior to 1997, when systems at the Income Tax Department were not computerised, would pay 75 percent of the balance due.

Defaulters would be informed of the scheme in a letter which would list the amounts they owed and what they would be paying if they took up the amnesty. Applicants have until January 15 to apply. The scheme is voluntary but applicants would be required to drop any objections or claims they might have.

Mr Fenech said that the total income tax due to the department amounted to 600 million euro. This had accumulated over 60 years.

When asked if such a scheme was fair with those who always paid on time, Mr Fenech said that the state had to find a balance. He noted that it might take the department longer to chase defaulters with the end risk being that the money owed would still not be collected.

One of the reasons behind the amnesty was for the government to recoup some of the money it was due especially when it was forecasting a drop of 60 million euros from taxes, including 20 million euros from income tax. The government had no intention of extending the scheme to value added tax, Mr Fenech said.