Dalli was first elected to the House of Representatives of Malta in 1987 on behalf of the Nationalist Party and since then he has been re-elected in five successive elections: in 1992, 1996, 1998, 2003 and 2008. He has served as Parliamentary Secretary for Industry (1987–1990), Minister of Economic Affairs (1990–92), Minister of Finance (1992–1996, 1998–2004) and Minister of Foreign Affairs and Investment Promotion (2004). During his tenure at the Ministry of Finance (the longest in Maltese political history), Dalli is best remembered for his modernisation of the taxation system through the introduction of VAT in 1994 and again in 1998.