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Malta Registered Unemployment September 2022Total tax revenue in 2021 amounted to €4,580.4 million, implying a tax burden of 31.2 per cent.

Tax Revenues: 2021

Following the economic downturn in 2020, overall tax revenue in 2021 increased by €616.5 million over the previous year, totalling €4,580.4 million, thus exceeding pre-pandemic levels. This figure is equivalent to 84.2 per cent of total general government revenue collected in 2021.

Direct taxes amounted to €2,057.1 million, or 44.9 per cent of total tax revenue, an increase of €349.6 million from 2020. The Personal and Corporate Income taxes, which rose by €185.0 million and €156.8 million respectively, contributed most significantly to this increase.

The second largest increase was recorded in indirect taxes, which rose by €190.3 million, for a total of €1,608.6 million, equivalent to 35.1 per cent of total tax revenue. This increase was mainly the result of higher Value Added Tax receipts (€151.3 million), followed by Taxes on Production (€17.6 million), mainly on account of higher duty on documents (€26.8 million) and gaming taxes (€3.2 million), partially offset by drops in motor vehicle registration tax (€12.7 million)1 . Other taxes on production also increased by €14.6 million over the preceding year.

Social contributions2 paid by employees, employers and self- and non-employed persons represented 20.0 per cent of total tax revenue in 2021, standing at €914.8 million. An increase of €76.6 million over 2020 was registered, reflecting the resilience of the labour market (Table 1).

The overall tax burden denotes the total amount of taxes and social contributions, expressed as a percentage of Gross Domestic Product (GDP). In 2021, the total tax burden for Malta amounted to 31.2 per cent of GDP, which reflects an increase of 0.9 percentage points when compared to the tax burden of 30.3 per cent of GDP reported in 2020. Over the past 10 years, the total tax burden has been consistently above 30 per cent of GDP, with the lowest rate recorded in 2020, while the average tax burden for the 1995 to 2021 period stands at 30.7 per cent (Table 2, Chart 2).

By the end of last year, direct taxes (which also include Capital taxes) amounted to 14.0 per cent of GDP, compared to the share of indirect taxes which stood at 11.0 per cent. Meanwhile, the share of Social contributions stood at 6.2 per cent of GDP, decreasing by 0.2 percentage points over 2020 (Table 2, Chart 1).

Income Tax receipts by ESA 2010 institutional sector

In 2021, the household sector accounted for more than half of the income tax received by General Government, with a share of 61.4 per cent, equivalent to €1,206.7 million, while the contributions of Non-Financial and Financial corporations were 21.5 per cent and 16.7 per cent, respectively. On aggregate, Non-profit Institutions serving Households, General Government and Rest of the World totalled 0.5 per cent. In absolute terms, the increase of €343.5 million in income tax receipts over 2020 mainly resulted from higher receipts from Households (€185.5 million), Financial Corporations (€87.2 million) and Non-Financial Corporations (€66.4m) (Table 4).

Environmental taxes

Total environmental tax revenue declined by €6.5 million in 2021, amounting to €290.2 million. This figure represents 6.3 per cent of total revenue generated from all taxes and social contributions, and 2.0 per cent of GDP. Transport taxes fell by €13.4 million. The main cause behind this drop is lower revenue from the motor vehicle registration tax. Energy taxes (which include taxes on transport fuels) constituted the largest share of environmental taxes, accounting for 51.7 per cent. This was followed by Transport taxes (37.5 per cent) and Pollution taxes (10.7 per cent) (Table 5)  

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