5% FOR FOREIGNERS, 35% FOR LOCALS: MALTA’S SHOCKING TWO-TIER TAX SHAME EXPOSED
By Economist
Malta has no wealth tax. This decision serves it well. European history warns against such taxes.
Sweden scrapped its wealth tax in 2007. Wealthy residents stayed. Entrepreneurs invested more at home. Growth picked up.
France kept a broad wealth tax for years. Rich individuals left in large numbers. Investment suffered. Net gains stayed low after avoidance. France later narrowed the tax.
Norway raised its wealth tax recently. Hundreds of millionaires departed. Billions in wealth left the country. The policy created inequality between those who stay and those who go.
A German study modelled similar taxes. GDP would fall by up to 5 per cent. Investment would drop sharply. Jobs would decline. Net revenue would turn negative.
Malta must take note. It should never introduce a wealth tax. Such a step would hit local founders hardest. Talent would leave more than it is currently leaving. Home-grown businesses would shrink. Malta could do much better for its own entrepreneurs. Local founders face high personal income tax rates. These reach 35 per cent on higher earnings. Foreign-owned companies often enjoy effective rates around 5 per cent through refunds. This gap is unfair.
Malta offers low effective corporate taxes to outsiders. Companies pay just 5 per cent in many cases. Non-resident shareholders claim large refunds. The system attracts foreign investment and jobs. Yet Malta-based founders pay more. Resident owners bear higher corporate burdens. Personal taxes then add further weight. Local entrepreneurs arehammered compared with foreign rivals. This contradictionand injustice needs fixing. Malta woos foreign capital with generous terms. It relies on high taxes from residents for public services. Local founders create jobs and pay into the system. They deserve fairer treatment.
Why the difference? Malta competes for mobile international business. Low rates draw companies and activity. High personal taxes fund welfare for everyone. But the imbalance discourages home talent. Local founders may relocate or scale back, as several of them are already doing.
Malta should focus on fairness for local founders. It could extend similar refund benefits to resident-owned firms on reinvested profits. It could lower personal tax bands for active entrepreneurs. Targeted relief for innovation and job creation would help.
Europe shows one clear truth. Punitive taxes on success backfire. Wealth taxes drive founders away. Malta has avoided that trap. It can now build a fairer system. Support local entrepreneurs properly. Align incentives across residents and foreigners. Malta would then gain stronger domestic growth. Talent would stay. Businesses would thrive at home. Fairness and prosperity go together.