The applicability of a wealth tax in Malta : an analysis

Abstract

Purpose: The study proposes the implementation of a wealth tax to generate tax revenue while also reducing wealth inequality in Malta. Furthermore, this research examines the operating costs necessary to implement and maintain a wealth tax locally. Lastly, this study explores whether a wealth tax would improve the effectiveness of the current taxation system. Design: The objectives of the study have been achieved by comparing the literature review with 15 semi-structured interviews conducted with local tax professionals and government and non-government stakeholders. Findings: The findings show that the wealth tax should be implemented using self-assessment forms, with the government adopting the required enforcement role to assure appropriate compliance. Assets in the tax base should be appraised less regularly, with an inflationary index used to adjust asset values between valuation periods. Furthermore, there may be better alternatives to a wealth tax in Malta that would not jeopardise the country's position as a low-tax jurisdiction. Conclusion: The research suggests that a Maltese wealth tax would have several benefits, including increasing government revenue and reducing wealth inequality by redistributing wealth. However, it would also have its drawbacks. The Maltese population may suffer given the wealth tax's economic and social consequences upon its possible implementation. Finally, the government should investigate and discuss alternative options to avoid unforeseen repercussions. Value: This study sought to fill a research gap concerning the use of wealth taxes in Malta. In doing so, this thesis considered whether it would increase government revenue and decrease wealth inequality. Furthermore, it addressed the operating costs and other hurdles necessary to implement a wealth tax in Malta. Lastly, this study recommends ideas on how the government should implement a wealth tax to ensure its effectiveness locally.