Social budget that addresses pensioner and low-income earners

The 2017 Budget rides on a booming economy shouldered by growing tourism arrivals, unprecedented growth figures and a disappearing deficit

19 October 2016, 8:09am
Cartoon by Mikiel Galea
Cartoon by Mikiel Galea
The budget presented on Monday chiefly addresses pensioners and low-income earners. The 2017 Budget rides on a booming economy shouldered by growing tourism arrivals, unprecedented growth figures and a disappearing deficit.  

This allowed finance minister Edward Scicluna address the plight of pensioners by reducing further their tax burden and providing them with more disposable income. The same applied to low-income earners and other groups. A cursory look at the numbers involved will surely and clearly indicate that the government is trying very hard to uplift these sectors. This is both necessary because it is imperative but there is also a political angle. One that the Prime Minister Joseph Muscat has calculated will benefit him electorally, in the sense that this core group is in fact the segment that has long supported and given vitality to the Labour party. One that he feels that will also uplift thousands who do not share the same fiscal benefits of the middle class and those who are even more affluent.

In addressing the most vulnerable sectors he has been careful in not putting the burden on the private sector. 

Most of the burden is being shouldered by government and once again Muscat ignored calls to increase the minimum wage and control spiralling rental property prices. 

The budget does not directly address the problems in the property market, such as the thousands of vacant properties. Instead government announced the creation of Property Malta, an agency it will run together with the construction lobby, to attract foreign investors which could possibly drive property prices further up. 

The focus of the government turned to the forgotten sectors in society which have not benefitted from the trickle down effect of the growing Maltese economy. So much so that the intervention of the State was in fact needed. 

But in his narrative Muscat by design or coincidence has always said that the possibility of dispensing with fiscal advantages for these groups could only have been possible with the creation of wealth. It is a far cry from the traditional social democracies but it seems to have paid dividends for the Maltese premier.

Other small niches have been addressed, but let us not forget that this is not the last budget and yet another budget will have to be presented before a national election. It is also happening at a time when the government has been sailing through unprecedented economic growth stifled only by the repetitive scandals that rocked it from the first day it was elected in 2013.

Yet, the proposals that are outlined in this budget will be tested and tried by the electorate and those sectors who will be expected to react positively to them.

The Opposition has been fast to react calling on the budget as weak and without a vision. Beyond the political rhetoric on both sides, there is clearly a clear statistic that cannot be denied. Malta is doing well, it may have a malaise in its soul but its economy is not in a dire state and is in very good shape.

Surely the next few days will see a debate about the pros and cons of the budget. And surely we will be listening to different and fresh arguments about the way this budget will impact on different sections.  

Questions on whether the economy is sustainable and whether inequalities are growing is another matter and the answers will only be evident in years to come.