Malta announced tax cuts for parents of two or more children on Monday, in a government bid to counter its demographic decline.
Finance minister Clyde Caruana told parliament that the rock-bottom fertility rate of the Mediterranean island’s native population was the “biggest challenge” facing the country.
“We need to encourage more families to have at least two children,” Mr Caruana said in a speech on Malta’s 2026 budget.
A report by EU statistical agency Eurostat this year showed Malta had the bloc’s lowest fertility rate in 2023, at 1.06.
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Maltese Catholic archbishop Charles Scicluna in September said that Malta faced “ethnic extinction”.
Although densely populated, with about 1,704 people per square kilometre, almost a third of Malta’s population is made up of foreign workers and their families.
Caruana said on Monday that parents of two or more children will, from 2026, each not pay income tax on the first €18,500 of their income.
That will rise to €30,000 each by 2028. The tax cuts will be retained until the children are 23 years old.
The scheme is similar to another announced in Poland in September that will remove tax on families with at least two children having an income of up to €32,973.
Mr Caruana said in February that Malta’s native population was 406,000, of whom 24 per cent were aged over 65.
In his budget speech, Mr Caruana said Malta is forecast to have GDP growth of 4.1 per cent in real terms in 2026, broadly similar to 2025. - Reuters
