insight

Budget 2002
What does Malta need?

The Budget for next year is just around the corner. Always a hot topic of conversation, MIRIAM DUNN asked some of Malta’s personalities what they felt to be among the main issues that should be addressed this year…

Peppi Azzopardi
TV presenter
I think people want to see more taxes being paid by the people who should be paying them. I’m not talking about the salaried employees, for whom paying taxes is a fundamental part of life, but those who know full well they do their best to avoid paying them.
It is time for all the talk about the Tax Compliance Unit to be replaced by action – the people want to start seeing results.
More than this, I think the government needs to instil a mentality that taxes must be paid. People are still not sufficiently shocked when they hear about tax evasion, they don’t consider it stealing. No one puts it on a par with taking money from other people or organisations. This needs to be addressed from an ethic standpoint.
I also think the budget should address some of the problems that minority groups experience. We might not have out-and-out poverty in Malta, but we tend to forget about people on the poverty line, those who are emarginated, on the minimum wage, for example.
Will businessmen complain about the budget? I have yet to find someone in business who doesn’t always have something to grumble about, whatever the economic situation!

Alfred Mifsud
Economist, former chairman of Mid-Med Bank

I would like to this budget focus on massive investment in re-training of our idle labour force. Re-training is the single most powerful ingredient to generate labour mobility to place excess manpower in the public sector into real, productive jobs. This in itself is the real long-term solution to the chronic budget deficit.
I would also like to see a real exposition of the true deficit and debt position with all items hidden in the Treasury Clearance Fund, unpaid bills and dead bank loans guaranteed and serviced from the public budget being exposed and brought on the table so as to at least establish the real size of the problem.
There should be a suspension of the privatisation programme until it is made an integral part of a national broadbased-restructuring programme. Otherwise, privatisation money will continue to finance short-term solutions leading nowhere.
The Finance Minister’s ‘mea culpa’. Please spare the annual recital that things are under control and getting better!

Joe Mifsud
Super One journalist

I would like to see the ceiling for tax extended – my own belief is that people earning less than Lm10,000 annually shouldn’t be taxed.
I would also like to see the interest on business loans lowered, since it is very difficult for entrepreneurs thinking of opening a business to do so. Our rates are in the region of 8 – 9% which is considerably higher than the rates charged in many countries abroad.
We also need to look at reviving our tourism industry, and one way this could be done is to remove the VAT charge on accommodation. Nothing has been done to replace the Tour Operators Subsidy Scheme (TOSS) incentive since it was scrapped. Some new initiative should be brought in to take its place and give the sector a boost, but rather than focusing solely on the British tourist industry, it should be extended to cover German tourists as well.
As to whether we are beginning to see any fruition from the move to curb tax evasion, I spend a great deal of my time in court and I can honestly say I’ve seen no one arraigned on charges related to this. Either the Tax Compliance Unit is incompetent or the people there are working very, very stealthily.

Marie Briguglio
TV presenter and environment expert

What do I think the government should spend money on? Most definitely, the environment.
What should the government tax? Pollution.
Of course, I'm sure there are other important areas, but I think the environment has now crawled its way up to being a national priority. In other countries the Polluter Pays Principle is standard practice: air pollution, waste generation, resource depletion, even vacant property. If it is harmful to the environment it is taxed and discouraged.
Right now, in Malta, we really allow polluters to get away with it in many
areas - which actually means that everyone else is paying through their
health, their quality of life and ultimately their income tax!
I also think that the government is heading for some serious spending on environmental infrastructure - water and waste treatment, awareness campaigns, new management structures, cleaner energy and public transport. Well, that's probably enough to use up all the budget!

Pierre Portelli
NET TV journalist

The government needs to keep stressing on the public debt as it has been doing. It has made good inroads in this respect, since, according to the finance minister, we are on target for the second year in a row. Although critics are saying that the public debt is still increasing, the point that must be remembered is that it is not rising at the same rate.
The second issue is obviously tax evasion. I’m sure I speak for a number of people when I say that I hope the finance minister will have some results to show us from the measures he put in place.
As to whether the salaried employees have borne the brunt of the clampdown on tax evasion so far, all I can say is that I hope we will see the upper class targeted in the way the middle class was last year.
The other main issue is the continued reforms in the government structures, which have been ongoing since 1992. These, admittedly, are not popular, but they are very much needed, whether they were income tax, VAT or the new reforms we are told are in the pipeline.
Lastly, I hope the government will come up with some initiatives to inject some courage into the economy in the wake of the 11 September disaster, be they fresh ideas or incentives for business.

Claudette Pace
TV presenter and singer

From the complaints I receive from my viewers, I would say the issues they most want tackled relate to the environment.
People are becoming much more aware that some illnesses, such as allergies and asthma, stem directly from our environmental problems, like pollution, fumes and Maghtab and they want to see some action being taken, irrespective of European Union membership.
If we are raising more money from collection of taxes, as we are being told, let’s immediately put some more money back in to deal with some of these problems.
I think the government should also be careful about hitting the people too hard in this budget. The general feeling is very bad at the moment, people are wary and unsure about the future, so the government should really tread carefully.

Lino Spiteri
Economist, former Labour finance minister

I hope that this budget will address the realities, which are not necessarily what we are being told about in the statistics we are given.
We also need to look at these realities in terms of what is needed and not what each sector wants.
If there is full tax compliance at the current going rates for income tax and VAT, then the collection should be going up, but this will, of course, produce a lot of grumbling.
It is a difficult task, not just for this government, but for any administration.