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Kurt Sansone
The Labour Party may be very critical of government’s policy to curb the deficit by resorting to increased taxation but do not expect any concrete proposals from the Opposition - at least for now - on which taxes will be reduced if it wins the next general election.
In an interview to appear in next Wednesday’s edition of The Malta Financial and Business Times, Labour Deputy Leader Charles Mangion says specific details will be announced in the electoral manifesto because “it is too early to determine what the economic and financial situation will be three years from now.”
A more mature Labour Party? Maybe, even if some would prefer to call it political opportunism.
The Labour Party’s discussion document ‘Towards a plan for economic and social regeneration’ states that increased taxation has had a negative impact on economic growth by reducing household disposable income and contributing towards a cash flow crisis. It says the tax burden has to be curbed without giving details.
But caution is Mangion’s maxim. He insists Labour’s commitment is not to increase the tax burden, with the eventual aim of reducing taxes especially for lower income earners.
Labour’s finance spokesperson steers clear from identifying whether a tax cut would be more likely to target income tax or VAT. However, he describes the VAT increase to 18 per cent and the levying of VAT for the first time on a wider range of household products as a socially unjust measure because it did not discriminate between high and low income earners.
Mangion also speaks of the need to curb government expenditure but rules out any job cuts from the civil service. “That would be a crazy thing to do,” he says.
For Mangion expenditure reduction has to come from controlling peripheral costs such as mobile phone usage, travel abroad and government car rentals, which will not result in major savings, and a rationalisation of the various foundations and authorities, which currently cost the tax payer Lm85 million annually.
He also insists on a more cost effective civil service by utilising government employees in a productive and accountable way. “Wages are a fixed cost that cannot be compromised. But we can get more productivity from government employees. It will involve a management overhaul,” Mangion says.
On the investment front, Mangion criticises Malta Enterprise for failing to create a packet of incentives for prospective investors beyond 2008 when the current set of incentives expire. He warns the country risks losing out to its competitors because of Malta Enterprises’ failure.
“Investors seeking new markets would want to know what the regulatory and investment framework is for at least the next five to 10 years. This long term vision is not in place,” Mangion says.
The full interview with Labour Deputy Leader Charles Mangion will appear next Wednesday in The Malta Financial and Business Times.
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