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James Debono
51.5 per cent of those opting for a single rate and 38.3 per cent of those opting for a joint tax return will not benefit from the tax cuts announced in the budget because they are already tax-free. Cumulatively, the tax cuts will not touch 46 per cent of contributors.
This emerges from an analysis conducted by Business Today of figures presented in parliament by the Prime Minister last week in reply to a parliamentary question.
Income tax figures for 2005 show that 61,966 declare a single income of less than Lm3,100 and 28,383 declare a joint income of less than Lm4,300.
These figures indicate that a considerable part of the population earn less than Lm60 a week. Although these figures include pensioners, students and people on relief whose incomes are generally lower than those of working people, the figures could also point to rampant tax evasion apart from cases of financial hardship.
It also emerges clearly that the tax cuts announced in the budget will not significantly effect the majority of the population. 25 per cent of those opting for a single tax rate will only see a tax cut of less than Lm1.30 a week. On the other hand a quarter of those opting for a joint computation will only benefit from a miserable tax cut of 57 cents per week. A further one tenth will benefit from a tax reduction of between 57 cents and Lm1.80 a week On the other hand the tax cuts will have a considerable impact on individuals declaring more than Lm6,000 - 15 per cent of single declarations - and couples declaring a joint income of more than Lm8,500 which amount to 16 per cent of the total number of joint declarations.
The former will benefit from a tax cut of between Lm 2.26 to Lm 2.98 a week while the latter will benefit from a reduction of between Lm 3.23 and Lm 4.67 a week.
Simplified tax system
Another significant aspect of the tax reform is a general simplification of the tax system with an absolute majority converging towards the 15 per cent bracket. 58 per cent of tax paying individuals opting for a single rate now fall under this bracket. Formerly they only accounted to 30 per cent. 66 per cent of tax paying individuals opting for a joint computation also now fall under this tax bracket. Formerly they only accounted to 42 per cent.
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