Cildania

[GoodGav]

In the Discussion of Taxation
Illejla lin-Nazzjon
August 5681 (backdated)

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QART QILDAR — The government coalition led by Partit Ulied Kildanja (PUK) and Partit għal Wieħed (PgW) revealed the tax reform bill before the Cildanian Parliament this Monday, after months of discussions and agreements between the two parties on its push to update the "ancient" system that has been set for more than three decades in the country's tax collection system. The PUK has promised to introduce reforms to the tax system ever since the 5680 general election, arguing that it was a necessity in light of the current situation in the country, where inequality is apparent and has unceasingly become a topic of national conversation among both right-wing and left-wing electorates. Leading authors of the tax reform bill stated that the income tax rates will shift from a progressive to a graduated form, making the tax "fairer and responsive in the economy", as they have stated that it had reached its effectiveness a long time ago, and it has since misaligned with the economic situation in Cildania.

Under the tax reform, there will be new tax brackets and adjustments to sales tax, which would boost government revenue by up to 3.5% in the next two years, increase spending for education and infrastructure initiatives, and reduce inequality between the rich and poor. The old system imposed tax rates ranging between 2%-26% under five tax brackets, which, from the perspective of the government's economic planners, was considered "tight" and with disproportional contribution between the taxes of the lower classes and the upper classes. Under the new system, tax rates will be from 2%-35%, targeting the high-income individuals while easing the burden on the poor. Meanwhile, sales tax on essential goods will drop from 10% to 8%, and increase on luxury goods from 26% to 30%, shifting the regressive taxes to the upper class. With the increase of public revenue and targeting of tax collection, inequality will be expected to be reduced up to 5% in the next two years while the increased tax collection will mean more spending on education and infrastructure programs.

Much will still be discussed in the parliament, but there has already been skepticisms behind the tax reform. To the left-wing parties, it is seen as a "band-aid solution" to addressing "fiscal irresponsibility" in the government, and that wage increase and introducing corporation tax will be much better. To the right-wing parties, it is seen as a burden for the "successful and well-established individuals" which have contributed immensely in the national economy, and this will leave the country vulnerable to "draining" of high-income individuals which can emigrate to other countries which have a fairer system and better quality of life. But for the current administration, it was a high time to replace the taxes to a more "relevant, fairer" tax system for all of Cildanians.