Watch: Caruana Calls For New Two-Child Tax Rate To Halt Demographic Collapse
Finance Minister Clyde Caruana called for a new tax rate – over and above the current single, married and parent rates – for parents who have multiple children.
In a Parliament speech delving into some worrying demographic forecasts related to Malta’s low birth rate, Caruana said that aggressive action is required to change the trajectory.
“We can’t change the trajectory simply by increasing the children’s allowance by €250 a year,” he warned.
“That is a measure to help families raise their children, not to incentivise them to have more children. We need to encourage people to have a second child and we must therefore have an incentive linked to the tax computation system.”
“We already have a parent computation and we should have another band for those who choose to have more than one child. Families with more than one child will be helped to the tune of thousands of euro a year.”
He forecast that such a measure will have to cost the state tens of millions to have an impact.
Noting that many people have said financial resources are the major obstacle preventing them from having multiple children, Caruana said that this tallies with the data.
Parents with two children have an average joint income of €58,500, compared to €50,800 for those with only one child.
Additionally, parents with two children tend to have their first child about two years earlier than those who stop at one.
Caruana noted that, as it stands, there are around 406,000 native Maltese people, out of whom some 24% are 65 or older.
However, if the current native birth rate of 1.16% remains as it is, then the native Maltese population will shrink to 336,000 in 25 years’ time. Out of these, 34% will be elderly.
By 2075, the native Maltese population will shrink to 240,000, with a 40% rate of elderly people.
“At the way society is developing, and unless any action is taken, our native population will shrink by 166,000 people in the span of 50 years, and the rate of elderly people will increase from 24% to 40%,” Caruana warned.
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