EUROMOD update : feasibility study : Malta (Tax-Benefit Systems 2007-2010)

Abstract

The purpose of this study is to examine the technical feasibility of micro-simulation model application for the analysis of impact of policy on social integration from the national as well as from the EU perspective. This is the first time that Malta’s tax-benefit system has been analysed from the angle of the main elements of this system implying the policy rules that are underlying the entitlement criteria defining them. This was an opportunity for the main players in this field to work in synergy on this vital issue: the Ministry for the Family and Social Solidarity, in charge of social benefits, Ministry of Finance responsible for the fiscal policy and income tax system in particular, and the National Statistics Office tasked with income data collection based on the EU-SILC methodology. This Feasibility Study describes the situation as it was in year 2007 and the major changes that have taken place in 2008 and 2009 and 2010.

Firstly, the study describes the main elements of the tax-benefit system namely: income, income tax brackets, capital resources and Social Security contributions. The second section of the study illustrates the main sources of data to be used for modelling purposes and also shows the examples of the calculation of income tax and social benefits. It has been agreed that the EU SILC 2008 data would be used, for income element since Malta has joined this system of data collection way back in 2005.

The third section of the study firstly outlines the qualities and limitations of the input data set. This section also focuses on specificities of Malta’s data collection and possible difficulties regarding model application. The study points at the possible combinations of sample and population databases. Also, simulation possibilities have been specified for both systems separately. Finally, the non-take up of benefit and the issue of tax and benefit fraud illustrate the situation and the possible unknown element on both sides.