Malta Budget 2022 in a Nutshell
by , on Oct 26, 2021 06:00:59 AM
Finance and Employment Minister Clyde Caruana presented the new national budget for 2022 in Parliament earlier this month. The new budget looks into a multitude of topics, including property and infrastructure investments, tax benefits, wages, pensions and environmental protection. With plans to make public transport free and introduce benefits for electric cars owners, it can be said that the new budget will affect a wide variety of people. As stated by the Government, it is expected that the economy will grow by 6.5% for the upcoming year which will help to recover from the relatively low 2019 levels. In the upcoming financial year, the Government also expects significant growth in exports and domestic investments with consumption levels to return back to the levels prior to 2019. The overview of the salient features of the 2022 budget plan provided below offers a look into those new measures.
Economy
- No taxes for the fifth consecutive year
- Low income families can receive additional cost-of-living increases
- Budget deficit to be halved to 5.6% next year
- Tax refund cheques to increase between €60 and €140 where the highest amount is to be paid to people with low income
- As from 1st of June 2022, the interest rate on income tax and VAT balances will be 7.2% per annum (0.6% per month)
Workers
- Employers working part-time will be taxed 10%, instead of 15%
- Employers who work unsociable hours and earn less than €20,000 can receive €150 as a benefit
- The cost-of-living wage will raise to €1.75 per week
- Tax refundable cheques will increase from a range of between €45 and €95 to a range between €60 to €140, depending on the marital status and income bracket of the individuals
- Employers who do not hold managerial positions, with an income less than €20,000 will be taxed 15% on the first €10,000 they make from overtime working
- Part-time workers will be allowed to pay social security contributions on more than one job up to 40 hours a week of employment
Education
- Increase of student stipends by 10%
- Students can work maximum of 25 hours per week and still be eligible for a stipend
- School headmasters to receive €10,000 to spend on food and basic needs of disadvantaged students
- More open apprenticeship placements in the private sector
Parents
- Free childcare will be offered in evenings and weekends for parents who earn a basic annual salary not exceeding €20,000 and who work atypical hours (shift hours, in the evening, weekends) in the following industries: accommodation and food services, administrative and support services, transport, storage, wholesale, manufacturing and retail.
- Threshold for parents with children under the age of 23 increased from joined income of €35,000 to €50,000 per year
- Increase of new-parents grant from €300 to €400 when they give birth or adopt a child
- Parents can receive a starter kit with ‘sustainable products’ for their newborns
- When only one parent is working , the threshold is increased from €26,000 to €35,000
- In case of a single parent, the threshold is increased from 23,000 to €35,000
Pensions
- Pensions will be increased with additional €260 per year or €5 per week
- Single pensioners, including also widows and widowers, whose income does not exceed €10,221 will receive between €4.10 and €5.00 per week
- The taxable ceiling on pensions is raised to €14,318
- Married pensioners whose income is less than €14,318 will be entitled to receive supplementary allowance between €3.47 and €6.50 a week depending on their income
- Service pensions will be increased with €200 which will not be included in the assessment of the social security pension
- The annual bonus will be increased with €150 for people who have reached the retirement age but do not qualify for a person as they did not have enough work contribution
- Working persionser will not have their income taxed subject to five year’s time
- Idea of legislation to raise the limit of inherited capital from €23,000 to €50,000 for couples and from €14,000 to €30,000 for single pensioners
- People who paid less than 5 years’ worth of national insurance contributions will receive a bonus of €400, while those who paid more than 5 years’ will get €500 per year
- Monetary donations made by pensioners to children consisting of up to €20,000 as well as donation of property’s air space will be exempt from capital wealth calculations
Transport
- Benefit from a free public transport in Malta and Gozo as from 1st October 2022
- Electric vehicles will be exempt from tax registration fee
- A five-year exemption on licence fees for electric vehicles has been extended
- Installation of up to 1,200 changing sport for electric vehicles in the next three consecutive years
- Increase of maximum grant on electric vehicles from €9,000 to €11,000 or €12,000 if a scrappage scheme is used
- VAT refunds for electric bikes and bicycles continue
Property
- First time buyers are allowed to receive a grant of €15,000 which is doubled to €30,000 if the property is located in Gozo. This measure will last three years after the budget announcement
- Extension of First-time buyer, Second-time buyer and Buying of properties in Gozo scheme for another year
- Schemes for young property owners, including the payment of 10% of the deposit at the time of the promise of sale and the possibility for low-income families to take loans
- Expansion of the Equality Sharing Plus where the Government undertakes to pay a maximum of 50% of the property of individuals who are 30 years or above
- Extension for businesses subsidies
- Reduction by half of the tax due on the first €200,000 on sale or purchase of property which has been rented for at least 10 years to tenants eligible for Rent Benefit Scheme, given by the Housing Authority. Also, no tax is payable when the property is sold to the tenant himself.
- No capital gains or stamp duty on the first €750,000 relief from tax on the sale and purchase of a) immovable property which has been built more than 20 years ago and has been vacant for more than 7 years, b) immovable property located in UCA zone or c) new buildings with traditional Maltese architecture. This is applicable also to promise of sale agreement
- Starting from 12th October, people who restore or refine such properties will get a VAT refund to a maximum of to €54,000 on the first €300,000 spent on renovation works
- Extension of schemes to help ownership for disadvantaged
- Pre-1995 rent housing valued at up to €250,000 and requesting future repairs, will be eligible for subsidies of up to €25,000
- Tax benefits for private property that is leased as an affordable housing
Health
- Medicines for cancer, osteoporosis, fibromyalgia, circulatory conditions, inflammatory conditions, IVF patients, rare diseases and certain rare and extreme allergies will be included in the list of medicines distributed by the government.
- Elderly people aged 80 and above who are eligible for a supplementary allowance will as of next year be also eligible for free medicines
- The glucose monitoring programmes to be extended to 17-21-year-olds
- Additional space can be rented to Mater Day
- A new blood bank and faculty for stem cell processing and storing can be created
COVID-19 measures
- Rent subsidies to be extended to a larger number of eligible businesses. Companies with unbiased or unabsorbed capital allowances incurred in 2020 and 2021 due to pandemic losed will be entitled to apply for a reduction of taxes against any taxable income.
Energy
- Work on the second interconnector and gas pipeline to continue
- Promised investment in Enemalta’s distribution network
- Revision to the calculation of the ARMS bills
- New €11 million reverse osmosis plan in Gozo to become operational
Environment
- Marsaskala is going to receive 40,000 indigeneous trees to be planted in the Inwardar national park
- Restoration of San Anton Gardens
- Studies conducted to show whether Triq Sant Anna in Floriana can be turned into a pedestrian zone and a garden
- Restoration projects at the family parks in Bengħajsa and Marsascala family park as well as Ġnien Kottoner and San Klement parks in Żabbar
- Pace Grasso stadium in Paola to be transformed into a 12,000 square metre community space with 165 trees, 2500 shrubs and 1,5000 ornamental plants planted
- Extension of schemes to boost solar panels, water heaters and heat pumps
- Plans for new carbon trading schemes for public and private entities
- Regional road at Santa Veneta to be executed under public-private relationship
- Ta ‘Qali national park with more than 60 football pitches’ worth of open space, 60,000 trees and 86,000 square metres ‘landscaping’
- €10 million to rebuild 30km of rubble walls across Gozo
- Rehabilitation plans for Comino, Victoria Lines, Għadira s-Safra wetland
- Idea of creation of a repair centre where people can get damaged goods repaired
Industry
- Investment of €470 million in the modernisation of various industrial zones and the creation of new ones which do not use ODZ land
- Extensive road programme to be continued
- Plans for the Grand Harbour
- Works on the airport road traffic and Mrieħel bypass, including extensive tree-planting
Tourism
- Xewkija heliport to be improved
Disability
- Allowance for children with a physical or mental disability will be increased with €5 per week
- Parents who do not work to take care of a disabled child over the age of 16 will have their grant raised from €300 to €500
- The subsidy rate for the ‘Home Helper of Your Choice’ scheme to increase from €5.50 to €7 per hour.
- The carer at home benefit is also to increase from €6,000 to €7,000
- Severe disability benefits will no longer be subject to examinations
- Investments in autism units, occupational therapy and Braille machines in school
- Installation of community hubs for disabled and ‘drive from wheelchair’ vehicle to teach people with disabilities how to drive
Arts and culture
- Reduction of tax to 7.5% on income incurred by artists
- €1 million guarantee fund will be set up for artistic events allowing producers and promoters to recover their costs when unexpected restrictions are implemented
- €2 million be used when seats cannot be sold out because of new restrictions
Sport
- Creation of new water polo pitches in Marsascala, Valletta and Marsaxlokk
- Creation of a new football pitch in Msida
- Rowing tank to encourage development of local rowers
- Outdoor velodrome built in Ta ‘Qali national park
Research and innovation
- Introduction of a new program ‘Go to Market’ with the aim to commercialise advanced technologies on local and international scale
- Maltese entities and researchers to receive benefits from the Horizon Support Measures scheme and collaborate with European and international research entities
- Monetary incentives supporting innovative, ecological and digital business investments
Farmers
- €8,000 grant if farmers turn untitled agricultural land into orchards of fruit trees
- New incentives for more organic farming
- Extension of a new water project to provide recycled sewage water ro farmers
Although the new budget received generally positive feedback, a particular concern is that when drafting the plans for the 2022 budget, little was only mentioned about Gozo. However, as the country seeks to stimulate economic activity following the Covid-19 gross impact on the national economy, the new measures will certainly support the affected social and economic areas.
Author: Stephanie Marinova
