The reforms presented in this Budget in the area of property taxation will go a long way towards appeasing the anger that has been brewing, not only about inheritance tax but also about the way the capital gains system of old simply treated speculators and those who own one second home in the same manner.

The reforms should hopefully also ease the degree of property speculation, while also encouraging more owners to actually put their property on the market, as the level of tax is now far more reasonable if you choose to sell a property after you have owned it for a number of years.

Many notaries will tell you that the tax regime of old was the main reason why many properties were not being put on the market, so if these Budget measures help ease the logjam, it will all be for the good.

Government has not just reduced the capital gain tax from 35 per cent to 12 per cent as many are thinking. Previously, if you sold a property (excluding, of course, your own residence which is free of taxation) you had to pay 35 per cent tax on the profit you made. So, a property bought, say, for Lm10,000 and sold for Lm30,000 two months later would be liable to a capital gains tax of 35 per cent of the profit of Lm20,000 – around Lm7,000.

Many people found ways around this, however, by getting the valuation to exclude furnishings and other items to reduce the value, and so help them pay less capital gains. Those who were not willing to do these things (a minority in this country, I hasten to add) just paid up in full, or more often than not decided not to sell.

Now the tax is not 12 per cent of your profit but 12 per cent of the total value you sell at. In general this will mean that those who bought a property many years ago and choose to sell now will be better off with this 12 per cent tax than they were with the 35 per cent capital gain, but the speculator who buys and sells within a much shorter time span will, or might, be worse off. It remains to be seen whether our wily speculators will find ways around these measures too, but at least these reforms give a thumbs up for the honest, who do not want to avoid taxes.

There are many ways you can look at the way government has presented reforms to property taxation in general and capital gains tax in particular. Undoubtedly these reforms have, however, been generally well-received, most particularly by those who do not want to under-declare, or declare valuable furnishings and fittings or all the other ways people got round paying the full 35 per cent capital gains tax up to now.

The reforms are also good news for those who may just own one second property, which they want to sell after 20 or 30 years, when they might need their cash in retirement, as opposed to those who have speculated on the property market very successfully so far.

There should be more exemptions, however, than those I read in the Budget, which were, in fact, already there. Transfers of property arising from separations or sales by court order are exempt. But what if someone buys a property and has to sell quickly because say his or her engagement has ended, because she has become ill, because he has lost his job? If you have to sell on again in these circumstances, you have to pay 12 per cent of the total value of your property, even if you have made no profit at all because you have had to sell quickly. These cases should also be exempt. Nobody should pay a tax if they did not make a profit!

And we need to remember that not all property transactions in Malta are of boxes in Tower Road, which change hands at terrifying prices from one month to another. If someone buys a maisonette in shell form for Lm55,000 and has to sell it quickly for the reasons I outlined above, paying 12 per cent of Lm55,000 is more than a bit steep and should be looked at.

It will probably be in the area of inheritance tax, however, that the smiles will be broadest. The terribly draconian measures introduced a couple of years ago caused a tide of anger and resentment from your average core property-owning voter against the government. The tax was rightly seen as outrageous. Now all those who have inherited a property post 1992 will, in fact, have to pay 12 per cent on the total profit made, that is on the difference between the sale price and the value shown on the deed of transfer causa mortis.

Many, of course, would prefer no tax at all on inherited property, but this is certainly a lot more reasonable.

None of us like paying taxes and it is therefore doubly imperative that taxation is scrupulously fair. The old regime of property taxation was not. These proposals are far better. The people complained and the government listened. We need more of this in the coming years...