The coming Budget will be the third one in a row that claims Income Tax is being cut.
Facts, however – government facts at that – disprove this.
According to the January to August government finance data issued last week, government revenue from Income Tax has been on the increase these entire past three years.
In 2005, revenue from Income Tax was already the highest item of revenue in government coffers, at Lm121 million (up to August alone).
By last year, adding a further Lm12 million, it had far outreached all other sources of revenue, coming up with Lm133 million.
By August this year, revenue from Income Tax had increased by a whopping Lm23 million, to Lm156 million.
It can be argued that this increase in revenue from Income Tax is coming from better Income Tax Department efficiency or from companies, but many do not buy that.
The GRTU’s Vince Farrugia told this paper that his association’s members are complaining that the government seems to be spending more and more while people, especially the self-employed, keep paying more Income Tax.
The same government finance figures also state that total government expenditure for the same January to August period has continued to rise – from Lm621 million in 2005, to Lm637 million this year.
Last year, government reduced the total expenditure figure to Lm620 million, but that was because it drastically cut capital expenditure from Lm86 million to Lm69 million.
The government is cavalier with people’s money, says Mr Farrugia.
At a press conference held on Friday, Mr Farrugia said the GRTU will be asking the two main parties to commit themselves to removing the 35 per cent band and to have two bands only, 15 per cent and 25 per cent, with the tax ceiling raised to Lm6,000.
As for this year’s Budget, the GRTU is demanding a revision of the Income Tax bands, with the 35 per cent band applying only to couples earning more than Lm15,000, or more than Lm12,000 in the case of a single tax computation.
Mr Farrugia is unfazed by criticism: countries like Estonia and the other Baltic states cut down on taxes to one or two flat rates and saw strong economic growth as a result, he says.
He reckons that these suggestions would cost government coffers something like Lm40 million and says the government can easily recoup this by spending Lm40 million less, instead of continuing to increase expenditure like there’s no tomorrow.