The Malta Independent 28 July 2026, Tuesday
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Taxed To leave

Malta Independent Sunday, 1 October 2006, 00:00 Last update: about 13 years ago

There is an uncanny silence this year about preparations for the Budget.

Usually, it is all Sturm und Drang, with shouting and threats all over the place as unions and constituted bodies fight it out in the footlights, each pushing for all its worth.

We remember, don’t we, the long MCESD meetings, the “impromptu” statements made to microphones just outside the building, the walkouts and similar drama. And the “retreats” held in Gozo with so many unshaven men on the boat back. And the recriminations coming later, with non-government sides being careful to wash their hands of any taint of responsibility as the government was engaged in the uphill struggle to contain the deficit and to bring in new taxes to redress the economy.

MCESD has broken its back now, and the biggest union has enough problems of its own to keep it fully occupied. Even so, however, there is an unnatural silence. It’s almost as if the Budget has suddenly become a non-event.

Or has it? The truth is everybody has realised this is very much a pre-electoral Budget and the goodies are coming. Constituted bodies and unions have been having quiet contacts with the government, the former more than the latter, and somehow they have not only put their points across, they have had eager listeners and they quietly feel they will get what they asked for.

This will be a businessman’s Budget. The government seems to have finally heard the complaints made so many times by employers, businessmen and SMEs, that the business environment was not very conducive to carrying out business. Whether the message has got through or not, of course, only the Budget Speech will tell. It does seem, from all the signals one gets, that with some money in the kitty left over from the privatisations and the cost controls put in place in the past months, the government seems ready, Treasury permitting, to open up and allow a reform of the tax bands for businesses.

Choosing to do this rather than change the Income Tax bands of ordinary citizens is, of course, a political decision, though it may also be that a magnanimous government will decide to do both.

But not everyone is a businessman, nor is everyone a worker. And while businessmen and workers are well represented in the bodies the government consults before Budget Day, there is no one to represent society as a whole, including the workers not represented by unions, the non-workers, the families, the housewives.

And though it may sound petty and self-defeating, this newspaper will continue to argue for a clear commitment to cut down, to a very considerable degree, that heinous levy that taxes the Maltese every time they choose to go abroad – the departure tax.

There is no doubt at all that this is the most hated tax of all, and people reserve for it the hatred they have for traffic wardens and the surcharge.

At some point over the past months, the government looked as though it was going to commit itself to a full-scale revision of this tax, then it started to get cold feet and rationalised that perhaps helping people pay the surcharge could have a better impact; and perhaps tweaking the income tax bands would help some people cope better with their finances.

And the nearer we got to the Budget, the smaller the chance seemed to get of having Europe’s highest exit tax reduced. The pre-Budget document even goes as far as to say this is not a priority at all and can be considered at any time when all other considerations have been given their due. To parse this government in-talk: it’s on the most back of back burners. Or expect just a symbolic cut.

This newspaper argues this is a heinous, unjust, tax that creates its own brand of feel-bad factor. It is a simple revenue earner for the government, which sees only the revenue it derives from it, as with cigarettes or whisky, and which does not perceive the multiple reverberations it causes.

It is a tax on pure enjoyment, because being able to travel abroad is one important way for the Maltese to earn the holiday they worked so hard for. Not even in the bad, dark days of Dom Mintoff’s time, when we had to endure 12-hour seasick journeys to go to Sicily to buy toothpaste and chocolates, were we taxed so heavily to get out of Malta.

It reinforces the insularity of the Maltese when everything points to the benefits for one and all that travelling abroad, seeing how things are done outside of Malta, helps open up and broaden the Maltese mentality.

And did we not join the EU precisely so that we do not remain so insular and cut off, to join the European mainstream? And are not EU programmes such as Comenius and Erasmus intended to help people lose their insular mindframe and adapt to a pan-European one instead?

The government will undoubtedly have someone whispering in its ear that lowering the departure tax will encourage more people to go abroad, hence decreasing their spending in Malta and increasing their spending abroad, with all that this implies as regards the current account. Again, such reasoning once again ‘forgets’ the specificity of living in Malta – that living on an island, anything and anyone who wants to come here must fly out here and, short of travelling up and down the only road in Malta which resembles, remotely, a motorway, the only way to really open up and relax, roam the wide open spaces and experience space, is by going abroad. Cut down on that and you get an angry, resentful people. Open up and you have people eating out of your hand.

This is no time for a symbolic, say Lm1, cut. The only way to go about it is to find what the average departure tax paid abroad is, and bring the local departure tax down to it.

There is no alternative.

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