Taxing the minimum wage - and the issue is?

The Malta Labour Party is making a great issue out of the fact that following the cost-of-living increase in wages announced in the last budget, minimum-wage earners are going to be paying income tax on extra income.

First of all let's get things clear. Married minimum-wage earners and parents will not be paying any tax. It's bonuses and any extra income of a single minimum-wage earner which will fall in the taxable bracket. This is because the minimum wage has now gone up to an annual €8,433 while the lower taxable bracket for a single person starts from €8,500. Mind you, this is not something completely new. This year, a minimum-wage earner was paying around €30 in tax a year. Due to next year's budget increase in the cost-of-living allowance, he'll be paying around €60. But this is not because the taxable bracket has been lowered; it had actually been raised for three years in succession up to the very first budget of this legislature. On the contrary, it is because the minimum wage has gone up.

The extra income of minimum-wage earners has got into the lowest taxable bracket because the minimum-wage in these past years was not frozen as someone suggested, but next year it is going to be around €1,000 a year more than what it was four years ago.

And by the way, while a minimum-wage earner will now be paying around €1 a week in taxes (which I don't think is something so fundamentally wrong, considering that he too is benefiting from roads, public services, refuse collection and a free health system), he can now get an extra €25 weekly by attending one of the courses being offered by ETC (something which has been extended to anyone earning less than €300 weekly). And the skills and training earned through this measure is something no one can take away from an individual; it is a life investment for the individual today to be able to find a better quality job with a higher pay tomorrow.

But of course Socialists can't appreciate this. They only measure the fish given for the day, and not the fishing-rod given for the years to come. Even if it at the end of the day minimum-wage earners are still going to earn more.

Comments

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