De Marco claims deficit decline due to one-off events

Opposition MP Kristy Debono says Malta should target 'quality lifestyle retirees', critcises 35% tax on interest earned through investment in government stocks 

PN deputy leader Mario de Marco delivers a speech in Parliament
PN deputy leader Mario de Marco delivers a speech in Parliament

The deficit decline is due to one-off events, PN deputy leader Mario de Marco warned.

Malta’s deficit is expected to fall to 1.6% of the Gross Domestic Product by the end of the year, down from 3.7% in 2012. However, during a parliamentary debate on the Budget, de Marco claimed that the decline was due to one-off events that boosted government income – namely the sale of the BWSC power station to Shanghai Electric Power, the payment of Enemalta’s arrears, the imposition of an excise tax on fuel, and the sale of citizenship.

Moreover, he warned that the national debt has increased by €600 million in the past two years.

 “Although the deficit has declined, the absolute figures of debt are still on the rise,” he said.

He criticised finance minister Edward Scicluna’s claim that fuel prices should be kept relatively high as a measure to discourage traffic.

“The government will reap in €5 million from taxpayers by waiting until January to reduce fuel prices rather than decreasing them now, and this move alone will make good for half of the latest income tax cuts,” he said, while warning that the high prices are harming the competitiveness of local businesses who have to compete with foreign companies reaping the benefits of cheaper fuel.

In his speech, De Marco reiterated several of the Opposition’s economic critcisms of the government – job increases in the public sector, plummets in exports, an increase in public wage expenditure, the latter of which the finance ministry has repeatedly miscalculate in its pre-Budget estimates.

“By the end of the year, government would have miscalculated its expenditure on public wages by €80 million,” he said, jibing that 106 passports would have to be sold to make good for such miscalculations.

He dismissed the government’s argument that the public sector headcount rise was due to its employment of more people within the education and health sectors, arguing that fewer than half of the 8,000 new public employees between March 2013 and April 2014 were employed in these two sectors and questioning why the government has recently employed 400 new people in the “real estate sector”.

De Marco also warned that poverty figures are constantly on the rise, and that 99,038 people were at risk of poverty as of 2014.

“14,000 elderly people were at risk of poverty in 2013, but the figure rose to 16,500 people in 2014, a statistic that should shame the government,” he said.

He warned that the recent increase in the minimum pension isn’t enough to elevate pensioners from poverty, and reiterated his call on the government to launch a non-partisan debate on the possible introduction of a second pillar pension.

Moreover, he warned that workers in the manufacturing and construction sectors have recently experienced wage declines.   

“Between April 2013 and April 2014, workers in the manufacturing sector saw their annual wage plummet by an average €600, while workers in the construction sector witnessed an average decline €1,700,” he said. “Those two sectors alone employ over 32,000 people, and it’s not enough for government to boast about low unemployment figures if in-work poverty is on the rise. Government should look at the people behind the numbers.” 

‘Malta should seek to attract quality lifestyle retirees’ – PN MP

Opposition MP Kristy Debono called on the government to develop a long-term, focused strategy on how to render Malta an attractive location for “quality lifestyle retirees”.

“Malta can target those people, particularly Nordic ones, who want to retire in a tranquil and secure country with a warm climate and attractive services that allow them to maintain a high standard of living,” she said in her speech. “This strategy is being developed in other Mediterranean countries, and can prove successful in Malta – perhaps in White Rocks or Gozo.”

She criticised the government for introducing excise duty on water as a substitution for eco contribution taxes, arguing that it contradicts other taxes – such as the most recent one on cigarettes - that promote healthy behaviour. 

“It doesn’t even appear as those [environment minister] Leo Brincat or operators in the water sector were consulted about this new tax,” she said. “Water operators have been left in limbo; they know that they’ll have to increase prices, but don’t yet know by how much.

She also warned that the 35% tax charge slapped on interest earned from money invested in government stocks is far too high, particularly since stock interest rates are currently at a low level. The combination of these two factos, she said, has left a number of elderly people with scant investing options.

“I hope that elderly investors aren’t being made to compete with the millionaires who apply to purchase a passport, who are now obliged to invest in government stocks.” 

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