Budget 2027: Winners & Losers

Who gains and who pays more under Budget 2027, from workers and pensioners to hotels, retailers and third-country nationals.

Winners

1. Workers

The Super Bonus is one of the Budget’s biggest surprises. Eligible workers earning as little as €2,000 annually will receive a tax-free payment ranging from €500 to €1,000, depending on their income. Unlike income tax reductions, which provide little benefit to those already below the tax threshold, this measure puts money directly into workers’ pockets. It is a particularly significant win for lower-income workers who might otherwise miss out on tax relief.

2. Pensioners

Pensioners are among the Budget’s most consistent winners. They will receive an additional €10 per week, including COLA, equivalent to around €520 annually. Further tax relief provides additional support for eligible pensioners. The increases continue a long-standing approach of improving retirement incomes through annual Budgets. However, their actual purchasing-power gains will depend on inflation and individual circumstances, particularly for pensioners facing higher living costs.

3. Families with children

Families benefit from more generous income tax bands and continued financial support. The changes should leave eligible parents with more disposable income, particularly those balancing employment with the costs of raising children. The measures also reflect the Government’s growing concern about Malta’s declining birth rate. Whether financial incentives alone can encourage larger families remains uncertain, especially when housing costs, commuting and work-life balance influence family decisions.

4. Low-income households

The additional COLA mechanism will provide eligible households with payments ranging from €200 to €1,500, depending on their circumstances. This offers targeted assistance to those most vulnerable to rising living costs. Unlike universal measures, the additional COLA mechanism directs greater support towards households with fewer financial resources. Combined with stable energy prices, the payments should help protect purchasing power, although eligibility and household composition determine how much individuals receive.

5. SMEs investing in productivity

Businesses willing to invest and modernise could benefit from the Budget’s emphasis on economic transformation. Qualifying smaller companies also stand to gain from more favourable tax treatment of retained earnings. These measures encourage businesses to reinvest profits rather than distribute them immediately. However, the picture is mixed: SMEs dependent on foreign labour face higher recruitment costs, making the benefits of the Budget highly dependent on their business model.

6. Advocates of economic transformation

For years, economists have argued that Malta needs to move away from an economic model heavily dependent on increasing its workforce. Budget 2027 signals a willingness to confront that challenge. Higher costs for certain forms of labour recruitment, combined with increased capital expenditure, suggest a shift towards productivity-driven growth. The direction will please advocates of reform, although whether these measures actually increase investment and productivity remains to be demonstrated.

Losers

7. Hotels and restaurants

Tourism operators face a more expensive operating environment. Hotel guests will pay an €8 nightly eco-contribution, capped at €64, while businesses employing non-EU workers face higher permit-related costs. Hotels collect the contribution from visitors, meaning the direct burden falls on tourists. Nevertheless, higher holiday prices could affect demand, particularly among price-sensitive travellers. Restaurants also face recruitment pressures, although they are not directly subject to the accommodation tax.

8. TCNs without long-term resident status

Third-country nationals without long-term resident status face some of the Budget’s most significant changes. New work-permit applications will cost €800, alongside a €400 annual infrastructure levy. Many will lose access to free public transport and certain benefits, while some driving-licence holders face an additional €83 monthly charge. These measures could substantially increase living costs, particularly for lower-paid workers, although exemptions and individual circumstances mean the impact will vary.

9. Retailers

Retail businesses employing third-country nationals will face higher recruitment costs, potentially adding pressure to already tight operating margins. The changes could make expanding employment more expensive, particularly for smaller shops and businesses with limited opportunities to automate. However, retailers could also benefit from the Budget’s household support measures. Super Bonus payments, pension increases and tax relief may stimulate consumer spending, making retail one of the Budget’s more complicated cases.

10. Short-let operators

Short-let accommodation faces a higher eco-contribution than traditional hotels. Guests will pay €10 per night, capped at €80 per person, compared with €8 and €64 respectively for hotel accommodation. This creates an additional price difference between the two types of accommodation. Although visitors pay the contribution, operators could face reduced demand or pressure to lower their own prices, particularly in the budget accommodation market.