Budget 2027 combines family tax cuts with higher pensions and targeted assistance
Budget 2027 extends the phased reduction in income tax for families with children, while introducing further increases in pensions and social support. The tax-free threshold for married couples with two or more children will rise from €22,500 in 2026 to €30,000 in 2027, reaching €37,000 in 2028. For parents with two or more children, the threshold will increase from €18,500 to €24,000 next year and €30,000 in 2028. The government estimates that the family tax measures will leave around €50 million annually with approximately 68,000 parents. Pensioners will receive an additional €10 a week from January, while more than 100,000 households are expected to benefit from the additional cost-of-living mechanism, which provides between €200 and €1,500 annually according to income and family size. The Budget also provides for a €500 payment per child in post-secondary education, covering around 14,000 families, and increases the Carers Grant to up to €7,500 a year. The measures form part of a social package valued at more than €121 million. (Times of Malta)
Higher tourism and work permit charges form part of Budget’s revenue measures
Budget 2027 introduces higher charges for tourists, non-EU workers and some non-residents, with the government estimating that the measures will generate or save around €324 million. From January, the tourist eco-contribution will rise to €8 per night in hotels and other collective accommodation, capped at €64 per person, and €10 per night in short-let properties, capped at €80. A new €10 contribution will apply to cruise passengers who disembark and reboard in Malta, while visitors to Comino’s Blue Lagoon will pay €5. The fee for new non-EU work permit applications will increase from €600 to €800, with an additional annual €400 infrastructure contribution applying to new and renewed permits, subject to exemptions. The government expects the work permit measures to generate €80 million. Changes to eligibility for free public transport, the atypical-work cheque and free childcare for new applicants are forecast to generate or save €46 million annually. Higher fares for non-resident ferry passengers and increased registration fees for certain recreational vessels are also included. The measures shift part of the cost of public services and infrastructure towards visitors and specified non-resident groups. (Maltatoday)
Budget deficit forecast at 2.6% as energy subsidies reach €400 million
Malta’s budget deficit is projected to remain at 2.6% of GDP in 2027, unchanged from the 2026 forecast, while government debt is expected to rise slightly from 46.7% to 46.8% of GDP. The figures were presented by Finance Minister Clyde Caruana in the Budget 2027 speech. The government expects the deficit to decline to 2.2% in 2028 and 1.8% in 2029. Revenue in 2027 is forecast at €10.1 billion, including €9 billion in tax revenue, while recurrent expenditure is projected at €9.4 billion and capital spending at almost €1.5 billion. Around €400 million is earmarked for energy and fuel subsidies, compared with €392 million in 2026. The government estimates that the deficit would be almost one percentage point lower without the recent energy price shocks. Economic growth is forecast at 3.8% in 2027, following projected growth of 4.1% this year, while inflation is expected to reach 2.7%. (Times of Malta)
