A study conducted by the Central Bank of Malta in relation to the measure of income tax reduction undertaken by Maltese government yielded positive results. The main initial impact of this new measure is foreseen to be on private consumption however a 0.7% increase in investment is set to happen due to an increase in generated demand.
The Central Bank stated that this measure will boost investment and employment as well as increase households' income. The new reduction in income tax rates is also set to increase Malta's Gross Domestic Product by 0.3% annually. In more concrete figures, the increase in national wealth is estimated at €40 million annually or €200million by the end of the current legislature.
Focusing on the effect on the population, the reduction in income tax rates will affect around 44,400 individuals, household income will increase by approximately 2% and disposable income by €1,440. Furthermore, removal of income tax on minimum wage and lower pensions will positively affect 7,500 people and raise their income by 1.2%. 800 new jobs (an increase of 0.4%).
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