A Labour government would extend the 15 per cent tax rate on part-time work to cover the first €10,000 earned, according to Joseph Muscat.
This will work as an incentive for people to declare supplementary income
The Labour leader said the current limit of €7,000 had been frozen for 14 years, adding the measure would cost €5 million in foregone revenue.
“By widening the bracket, part-timers would effectively be paying less in tax,” Dr Muscat said yesterday as he continued to unveil Labour’s manifesto.
The proposal will apply to full-timers who have a part-time job, pensioners and students but not those who have part-time work as their primary job.
Speaking at a press conference Labour’s headquarters in Ħamrun, flanked by finance spokesman Karmenu Vella and MEP Edward Scicluna, Dr Muscat said the measure would leave more money in people’s pockets and curb tax evasion. He estimated some 20,000 people would benefit.
A Labour government would also introduce a flat 15 per cent tax on the first €12,000 income derived from a part-time business activity. The measure would apply to full-timers, pensioners and students.
Dr Muscat said this was intended to reward “hardworking” people who supplemented their main income by having a small business on the side.
“This will work as an incentive for people to declare supplementary income and will help reduce the black economy,” he said, adding the measure was expected to target 3,000 people at a cost of €1.5 million to Government coffers.
Another measure is targeted at start-up companies, with Labour pledging a tax credit of €8,000 or 10 per cent of the investment.
The tax credit will have to be used in the first four years.
Dr Muscat said this proposal did not have an impact on government income because it dealt with new streams of revenue.
Women over 35, entering the labour market for the first time, will also receive a tax credit of €2,000 for the first year.
Dr Muscat said this would address a category of women who were unlikely to benefit from free childcare or existing tax credits for women who return to work after giving birth.
He made a declaration of principle that a Labour government’s preferred model for public projects was public-private partnerships.
In other proposals, he said Labour would introduce a Family Business Act to facilitate the transfer of a business from one generation to another.
A new Labour government would also work with financial institutions to create venture capital funds and companies would be given a tax credit of 150 per cent of the money spent on training of employees.
The expense would be capped at €3 million but EU funds could be tapped for the initiative.
Tax credits in short
• 15 per cent tax ceiling on part-time work extended to €10,000.
• Up to €12,000 from part-time business activity will be taxed at 15 per cent.
• Women over 35 will receive €2,000 tax credit.
• Business start-ups will receive €8,000 tax credit for first four years.
• Companies will receive 150 per cent tax credit on employee training schemes.
ksansone@timesofmalta.com