02 APRIL 2003

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Deja vu for Sant’s income tax proposals

The income tax proposal dished out by Labour leader Alfred Sant on Saturday is not as original as it seems, with both Dom Mintoff and George Borg Olivier having made similar proposals in the 1971 and 1976 general elections.
In the 1971 manifesto the Labour Party had undertaken to reform income tax and proposed the ‘Pay As You Earn’ (PAYE) system by which income tax is deducted at source by the employer. However, the manifesto declared that when the proposal would be put into effect "everyone will get a year’s grace from Income Tax."
The 1971 election also saw the Nationalist Party propose the abolition of income tax by "not later than the fourth year" of the legislature. However, the manifesto undertook to alleviate the income tax burden on married couples and single persons by raising the non-taxable portion of income, until the proposal would be implemented.
Despite the attraction of abolishing income tax the Nationalist Party still lost the 1971 election which saw the Labour Party return to government after nine years in the wilderness.
The income tax carrot was used once again in the run-up to the 1976 election when the Nationalist Party manifesto reiterated the pledge made five years before to abolish income tax. Describing income tax as a revenue system that hampered economic growth the manifesto spoke about the need to reform the system.
As it did in 1971, the Nationalist Party once again proposed a number of measures to alleviate the tax burden until the eventual abolition of income tax came about. One of the proposals, which the PN undertook to implement immediately upon election was to exempt farmers and fishermen from income tax, which is similar to a proposal floated about by Alfred Sant last week.
The Labour Party won the1976 election, which also proved to be the last election contested by Borg Olivier, who was subsequently replaced by Eddie Fenech Adami.
The only difference between the proposals announced by Alfred Sant and the electoral pledges made by Dom Mintoff and George Borg Olivier in the seventies is that the initiatives announced last Saturday do not feature in the MLP’s electoral manifesto.
The manifesto as approved by the general conference speaks in broad terms about the need to cap taxation without entering into the specifics of how the exercise would be conducted.

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
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