The Malta Independent 18 June 2019, Tuesday

Maltese workers pay Europe’s second-lowest taxes

Sunday, 31 July 2016, 09:00 Last update: about 4 years ago

Maltese workers pay the second-lowest amount of taxes in Europe, according to a study released by the Molinari Economic Institute this week, and are the bloc’s second-lowest taxed workers after the Cypriots.

The study entitled “The Tax Burden of Typical Workers in the EU 28” released this week, shows that the real tax rate on an average Maltese salary stands at 29.44 per cent. 

Taking the average Maltese gross salary of €17,759 a year, the study deducts social security payments and income tax, leaving a take-home pay of €13,309. After deducting an estimated €779 in VAT payments over the year, the average worker is left with €12,530 as a real net salary and an overall real tax rate of 29.44 per cent.

Tax Freedom Day represents the day on which people stop working for the government (i.e. to fund their tax bill) and start working for themselves. Malta’s Tax Freedom Day is the EU’s second-earliest and falls on 18 April. Cypriots’ Tax Freedom Day falls on 29 March.

On the other end of the tax spectrum, France has surpassed Belgium as the European country with the highest taxes on the average employee. The tax burden on the average salaried worker in France is 57.33 per cent, meaning that they effectively will have worked until 29 July this year to pay their tax obligations, or 210 days.

France overtakes Belgium in the European tax league table this year, although the tax burden is only marginally lower on the average Belgian worker at 56.9 per cent. This means that Belgians experienced “tax freedom day” on 27 July this year.

Austria has Europe's third-highest taxes on individuals, with a total burden on 54.7 per cent, giving it a tax freedom day on 19 July.

The EU average tax burden on individual workers is now 44.96 per cent, according to the report.

The study used OECD tax data and national salary statistics to reach its conclusions, with payroll tax calculations provided by EY.

The report’s authors observed that countries with high tax burdens do not always deliver the best public services, and this seems to be the case in France and Belgium.

“Belgian and French workers spend more than half of the amounts distributed by their employers [on] taxes,” said James Rogers, associate researcher at the Molinari Economic Institute and one of the report’s authors. “It is worthwhile to ask why they do not get back the best schools, the best health care, or the most generous pensions.”

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