For the first time in history, many middle-class families will not be paying any income tax by 2028, Prime Minister Robert Abela said on Monday.

Budget 2026, he said, was  “the best in the country’s history”.

“Today we gave the people a much bigger tax cut than last year’s,” he said in a  press conference at Castille, referring to a flagship measure that will slash tax for families with children.

“For the first time in history, many middle-class families won’t be paying any income tax by 2028.”

Abela hailed the government’s financial plan as one that guaranteed support for Maltese families across all stages of life, arguing that strong families were the bedrock of a strong economy and country. 

“The government is there when people start a family, when they have children, when they grow old,” he said.

During the press conference, Finance Minister Clyde Caruana said the budget was “a first” in that nowhere else in Europe were governments giving their people such massive tax cuts.

For years on budget day, the media would discuss the country’s financial situation, but not anymore. Nowadays on a day like this, people only wonder what else they were going to get over last year, he said. 

“We’re giving families more time for themselves. Because the tax cut will mean families can work less. In some cases we will be helping families to pay a significant part of their house loan,” he said.

“Some critics said families need time, not money. But truth is that by giving them money, we’re also allowing them to choose whether to have more time for each other.”

The press conference was held at Castille on Monday night. Photo: Chris Sant Fournier

Traffic, overpopulation and the environment

During the press conference Times of Malta asked the Prime Minister why the budget hardly contained any major measures to tackle the people’s biggest headaches – traffic, overpopulation and the environment.

Abela disagreed, insisting the budget contained targeted measures aimed at improvement.

For traffic management, the budget included an incentive of €25,000 for people under the age of 30 who renounced their driving licence for five years, he said, alongside the planned shift to an electric bus system in Gozo.

He also mentioned the introduction of a new park-and-ride system in Marsa and increased traffic management by public officials.

He said he was not giving up on a long-term mass transport system but there needed to be a serious discussion and a study on its viability.

“We should not give up, but we must proceed with proper study and avoid making mistakes,” he said.

On environmental issues, the prime minister detailed various incentives, including grants for solar panels, the continuation of the ambitious offshore wind turbine project, and the planned €300 million second energy interconnector.

He also highlighted the push for energy-efficient buildings alongside schemes for water recycling.

Regarding planning, Abela referred to ongoing talks with activists. He said that discussions had continued earlier in the day and that the parliamentary process on the controversial draft bills remained suspended until the texts were finalised and passed to stakeholders.

“Although we will not agree on everything, I have no doubt that we can find common ground,” he asserted.

Finally, addressing population growth, Abela framed the budget’s focus on digital investment as the long-term solution. He said the Labour migration policy and the €100 million investment in digital business transformation were driving the country towards robotics, automation, and AI.

“This means we are making a digital leap that will reduce our dependency on low-skilled workers. That is where we must go,” he said.

“We will reduce the need for low-skilled workers in these industries.”

Stability amidst global turbulence

Abela repeatedly drew a sharp contrast between Malta’s stability and the struggles faced globally, citing the pressures of wars and global inflation and the preceding pandemic.

“While other countries are fragile, we stood strong,” he remarked, reminding the public of previous government benefits like free childcare and free transport.

He stressed that the measures were designed to provide “stability and peace of mind to our families”. 

He also said this was a budget that focused on those most in need. A single parent on a minimum wage with two children, for instance, would see income rise by €650, he said.

Pensioners, Abela suggested, should view the budget as a sign of continued government commitment.

“In many other countries, pensioners can only hope for a freeze in pensions as the best case scenario, and they’re praying their pensions are not reduced,” he said. “In Malta we continue to raise pensions.”