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How Budget 2017 translated into a distribution of wealth for all

Government is now in a position to distribute wealth following unprecedented economic growth and job creation, Edward Scicluna says

jurgen
Jurgen Balzan
18 October 2016, 11:53am
Elderly people on a minimum pension will also get a €4 increase
Elderly people on a minimum pension will also get a €4 increase
The distribution of wealth in what arguably could be called an economic boom was the central message of Edward Scicluna’s fourth budget. 

After “stabilising” the country’s finances, Scicluna said that government was now in a position to distribute wealth following unprecedented economic growth and job creation.

Despite being a firm believer in trickle down economics, government has announced a number of measures which attempt to directly address inequalities, especially pensioners.

Within the first few minutes of his speech, it was obvious that pensioners, low income earners and the most vulnerable people in society are government’s main targets, with Scicluna clearly spelling it out; “poverty is not a perception, but a reality we will tackle with facts.”

However, these mesures would not have been possible without a sound economy and the figures show that the country’s finances are in good shape, probably the best they have been since the economic boom in the 90s. 

Scicluna said that government was well aware of the causes of poverty; a lack of work, low-income jobs especially for unskilled workers, old age – especially for pensioners depending on one pension – and health issues and other problems which lead to families depending on state aid.

In-work benefit

The number of families at risk of poverty and social exclusion has been cut by 5,000 within Labour’s first year in government and Scicluna said that this was achieved thanks to a number of measures, including tapering and incentives for single parents to enter the labour market. 

Sciucluna announced that the ceiling for in-work benefits will increase by €50 for families with two working parents earning up to €20,399 will see their in-work benefit increase by €200 a year.  

Single parents earning between €6,600 and €14,999, who currently receive up to €1,200 will benefit from a €50 increase while families who only have one breadwinner will benefit from increases ranging between €150 and €350, depending on their income. 

This will benefit 3,000 families on low or medium income.

Minimum wage earners 

Minimum wage earners will at least get a €4 a week increase, or €208 a year, with government bearing the full cost of the increases. 

Over and above the COLA, families with one breadwinner on a minimum wage and who do not have children will receive a €4.38 a week increase while single people who earn a minimum wage will receive an increase of €126.36 a year. This will benefit 11,000 couples and 5,000 single people. 

Pensioners

Once again, pensioners over the age of 75 who still live in their private residence will get a €300 grant while up to 12,500 elderly people who do not qualify for a pension because they only paid between two and four years of National Insurance contributions will get a €150 bonus. 

Following the increase of the minimum pension to €140 a week in last year’s budget, elderly people on a minimum pension will also get a €4 increase.

This will also benefit some 2,500 married pensioners who receive an old age pension. 

Pensioners will also be exempted from paying income tax on pensions, including external ones e.g. foreign pensions, which do not exceed €13,000. This reform will be introduced over two years and will see up to 22,000 pensioners save up to between €210 and €585 a year.  A further 9,000 pensioners will be completely exempt from paying income tax. 

€13,000 is equivalent to the highest pension given by the government, but Scicluna said no tax will be charged on the first €13,000 of any income from pensions.

Up to 9,500 elderly couples on one single pension – who do not qualify for a tax cut – will benefit from €4 a year increase. 

5,000 people who receive a service pension will be given an additional €200 next year.

Carer’s allowance increase 

In its drive to have more elderly people living in the community, government will be removing the means testing for eligibility to the carer’s allowance. 

Unmarried and unemployed people who care for their parents will see their allowance increase by €35 a week to €140 a week.

Married people who take in their parents and care for them will be eligible for an allowance of €90 a week. 

A respite service for carers will also be introduced, with assistants being provided to take care of their relatives and give the carers a break.

The measure aimed at reducing demand for places at old people’s homes will be renewed, with pensioners who employ full-time or part-time carers get up to €5,200 a year. 

Disability allowances

People with disability who cannot work will see their social benefit rise to the level of the minimum wage.

Benefits will also be introduced for amputees, who do not qualify for disability allowances, will also be eligible for a pension and free medicines. 

Rents

Recognising the increase in rental prices, government will double the subsidy which currently benefits 1,400 families. These families will now receive between €133 and €166, but only against the presentation of a rental contract. Those who choose not to present a rental contract will keep receiving the allowances at the current level i.e. between €66 and €83.  

Despite this, government aims to double the number of families who receive the allowance to 2,800. 

Increases in social housing rents will be rescinded, returning rents to 2013 levels. 

A pilot project for 100 tenants will see landlords who enter into a seven-year fixed rate rental agreement with low-income families will have the tax on rental income reduced to 5% from 15%. 

€8 million fund for past grievances 

Government will allocate €8 million into a fund which will aim to resolve long-standing grievances by various workers, include those in the old labour corps, those in the former Malta Electricity Board, retired port workers and policemen demanding payment for overtime worked over the years. 

jurgen
Jurgen Balzan joined MaltaToday in 2011, specialising in politics, foreig...