Property Tax often includes annual taxes based on the value of immovable property, taxes on sales of real property, net wealth taxes, taxes on inheritances and gifts, taxes on transfers of securities, and even taxes on the non-use, or uneconomically wanted, or non-economically beneficial, types of properties. In Malta, property tax is one way of distributing wealth amongst society- mostly by taking it from the rich and giving it to the poor. Countries as diverse as Ireland, Greece, China, Cambodia, Croatia, Egypt, Liberia, Namibia, and others, all devise forms of property taxes to boost their government revenues, whilst reducing inequality.
Some form of property tax must soon come to Malta, for various reasons. To begin with, the EU is unquestionably looking with a big magnifying glass at the economic freedom that all finance ministers in Malta have to operate in. Additionally, property in Malta, especially that which is owned by foreigners, is possibly one of the contexts within which most tax evasion is occurring, undoubtedly after the collection of VAT. Moreover, as previously mentioned, property taxes are the most effective way of reducing the general levels of inequality within Maltese society.
The fiscal armoury presently available to any Maltese government is, for a number of reasons circumscribed into income tax, value added tax, and customs duties, which post-EU entry have lost much of their previous weight in the total tax mix. Also Malta's inflow of EU funds will not remain at the same levels.
The majority of Maltese citizens are proud owners of their own residential property. This is something of which we are rightly proud of as a nation. Moreover, several Maltese spend their summers in smaller summer residences that they own or rent, while many family-conscious Maltese have the means to provide for their offspring when they start married life, in the form of a residence for the new family- something which should be protected.
However this isn't something which will be of relevance for much longer. Especially when we are living in world where wealthy foreign owners buying property in Malta, never or very rarely live in it, but rent it out to relatives, and friends, and do not declare one cent of income.
One must also take into consideration that Malta does not have infinite resources of either land or even constructed buildings. On the demand side it is simply idiotic to argue as though ever more land will be made available for foreigners who wish to come and stay here.
The last National Census presented there is far too much long-unoccupied and long-unutilised property both in Malta and Gozo. Purely in such a context, it is simply bad economics from an overall national viewpoint to allow more high-rise buildings, bringing down villas and old houses, ruining gardens, or taking over open land to build more villas, apartments and commercial properties.
It is within the overall context of this background that one must then start looking at property taxes. For example in South Africa, the tax paid on a property of a certain high value is much higher than the tax paid for a property with a tenth of the value of the former- even proportionately.
Property taxes literally boost government income, and allow governments to redistribute from the rich to the poor, and thus reduce inequality in their constituencies. Of course this concept is applicable with regards to all government taxes and expenditures, and not just property tax.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
