The proposals to change Malta’s taxation structures will put more emphasis on taxing spending rather than income, and this will help people with a lower income, said parliamentary secretary Tonio Fenech yesterday.

Mr Fenech said that the Commission for Tax Reform had come out with various proposals in the pre-budget document for 2007, that has been entitled A Solid Future. He said that implementation of the reforms must be

carried out responsibly in order to avoid endangering the economic growth rate that Malta has managed to generate.

Mr Fenech was speaking during a radio talk show on Radio 101 yesterday. He said that this was the second pre budget document and that last year’s experience had been a fruitful one, with the participation of various social partners in the discussion.

He said that last year’s document had been published with a five-year strategy in mind and this year’s document, like the last, gives primary attention to education, the economy and the environment.

Mr Fenech said this year’s document includes proposals for a change in Malta’s taxation system. He said that the Tax Reform Commission had looked into various taxation structures that it had compared with other EU models. The measures also place the emphasis of taxation on spending rather than income and this, in turn, will help employers because it would mean that they would not have to carry such a tax burden. The taxation rate on companies, he said, had various advantages and when compared to other EU nations, Malta’s rate was eighth from the bottom. Giving more details on personal tax, Mr Fenech said that the proposals included a movement of the tax bands. He also said there was a proposal that could help reduce undeclared part-time employment by reducing the Social Security contribution to a pro rata system. This, he said, should encourage people to take up and declare part-time work.

Another proposal for entrepreneurs is that if a couple own their own business, one of them may be registered as an employee, to further reduce the burden.

The document also addresses the industrial situation and includes specific measures in the field, including research and innovation and a strategy for boosting the concept of added value.