News | Sunday, 19 April 2009

PRINT THIS ARTICLE

Baby tax cut suits mums just fine – ministry

Matthew Vella
The €2,000 tax credit for gainfully occupied women who have had children since 2007 will be more than enough to cover an entire year’s tax, the finance ministry has insisted.
What was first announced in last year’s budget as a one-year tax exemption for employed women who became mothers in 2007, has turned out to be a tax credit capped at €2,000.
To women whose large incomes generate over €2,000 in tax, the credit may have done little to allay post-partum woes.
The actual measures are: a maximum €2,000 tax for every child under the age of 16 for all women returning to work after having been absent from active employment for at least five years; or for women either currently employed or who were not absent from active employment for more than five years, and who had children since 2007.
On its part, the finance ministry said “the term ‘exemption’ rather than ‘tax credit’ has been used in the budget speech to make it more understandable to the general public.”
A ministry spokesperson said the tax credit will be more advantageous than a year’s exemption because any unutilised credit in the year the mother becomes eligible, may be used in the second year.
“In most cases a €2,000 tax credit will be an exemption, because the tax a mother returning to employment would have paid – had the credit not been available – would have been less than €2,000,” the spokesperson said.
Likewise, the National Council of Women’s president Grace Attard said a €2,000 tax cut would cover the tax due for a €17,000 salary. “It will reach higher paid women as well,” she said.
“We agree with tax credits, and those previously introduced worked to get women back into employment. What we are considering now is whether a capped exemption will lead to abuse or not: for example, husbands transferring businesses to their spouse’s name to benefit from a tax cut,” Attard said.
The government had previously introduced tax credits to encourage women to return to employment in 2005.
Attard said the NCW is campaigning for an extension of maternity leave from 14 to 18 weeks. “While keeping in mind the effects of the present crisis and the pressures faced by SMEs, we think longer maternity leave should be employed in tandem with the tax credits, to encourage women back into work.”
The ministry told MaltaToday that employers now will have the option to deduct from their employee’s wages only that amount that would be payable as tax, after the tax credit is deducted.
However, they will also have the option to deduct tax as usual. The employee would then claim back the refund in her tax return. If the tax return is filed in time by 30 June 2009, the refund would be paid by December 2009. If it is not paid by that date, the Inland Revenue would be obliged to pay interest at 0.75% per month until payment is settled. If the claim is made in 2010 for tax paid in 2009, the refund is repaid by December 2010 and so forth.

Any comments?
If you wish your comments to be published in our Letters pages please click button below.
Please write a contact number and a postal address where you may be contacted.

All the interviews from Reporter on MaltaToday's YouTube channel.

EDITORIAL


Tilting at wind farms

INTERVIEW