€2,747.6 million in tax revenue in 2014

Total tax revenues in 2014 amounted to €2,747.6 million, implying a tax burden of 34.6 per cent.

Total tax revenue last year went up by €260.6 million over the previous year, and stood at €2,747.6 million. Tax revenue may be broadly classified under three main headings: indirect taxes, direct taxes and social contributions.

All three categories of tax revenue registered an increase. The largest rise was recorded in indirect taxes by €118.5 million. These represent taxes linked to production and imports. This increase was triggered by higher returns from VAT (€60.1 million) and taxes on products (€50.4 million).

Moreover, other taxes on production and import duties went up by €6.2 million and €1.8 million respectively. During 2014, indirect taxes stood at €1,111.9 million, making up 40.5 per cent of total tax revenue.

Concurrently, direct taxes increased by €111.2 million. These are defined as current taxes on income and wealth plus capital taxes and other current taxes. In the year under review, such taxes amounted to €1,167.3 million, representing 42.5 per cent of total tax revenues.

The rise in direct taxes was mainly the result of added proceeds from other current taxes (€38.2 million), personal income tax (€37.5 million) and corporate income tax (€36.2 million). Conversely, capital taxes registered a marginal decline of €0.9 million.

Social contributions are compulsory actual contributions paid by the employees, employers, as well as self- and non-employed persons. This category represented 17.0 per cent of total tax revenue, at €468.4 million, an increase of €30.9 million over 2013.

The overall tax burden denotes the total amount of taxes and actual social contributions, expressed as a percentage of GDP. During 2014, the tax burden for Malta was 34.6 per cent compared to 33.0 per cent recorded in 2013.

Analysing the income tax receipts by ESA 2010 institutional sector, in 2014, the household sector accounted for the biggest share with 52.3 per cent. In addition, the financial and non-financial corporations sectors contributed 26.6 per cent and 20.8 per cent respectively. On aggregate, the non-profit institutions serving households, general government and rest of the world totalled 0.3 per cent.

In a statement issued earlier today, the government said that the increase in tax revenue was the result of the strong economic performance recorded since 2013 which augmented wages and earnings of households as well as increased profits by firms.

"These figures corroborate other indicators, among them the high level of financial and economic optimism, which regularly sustain the view that the robust economic growth registered is being transmitted to families and businesses. Indeed, private consumption also increased markedly during the period resulting in an increase in revenue from VAT by over €100 million in 2013 and 2014."

The government also noted that the increase in personal income tax revenue was attained despite the lowering of income tax rates and that the dynamic performance in the labour market is also confirmed by an increase of €54 million, over two years, in social contributions reflecting both an increased number of participations in the labour market as well as higher wages.

"The increase in tax revenue to GDP ratio also reflected the various budget measures which this Government implemented to enhance efficiency in revenue collection and reduce tax evasion including the investment registration scheme and the 15 per cent rent scheme.

"These data highlight three main points. First, that economic growth is being conveyed to our families in terms of higher employment and wages. Secondly, is that we are being successful in our policy to broaden the tax base. The figures also show that this Government’s efforts to combat evasion are bearing results," Finance minister Edward Scicluna said.