[WATCH] Budget 2021 targets COVID recovery with €100 million stimulus

Here are the key points from Budget 2021

Finance Minister Edward Scicluna
Finance Minister Edward Scicluna
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Posted by MaltaGov on Monday, October 19, 2020

The theme for this year's budget is "Strongly Moving Forward", with the document set to be presented in parliament imminently. 

While COVID-19 dealt a major blow to government finances, increased government spending will continue through next year to help ease the negative impact of the virus on household. The budget comes with a stimulus package of €100 million that includes €50 million in vouchers.

Malta's debt-to-GDP ratio is projected at 58.1% of GDP through 2021, and will remain below 60% until 2023. The deficit is expected to stand at 9.4% of GDP for this year, droopping to 5.9% in 2021. 

Due to the suspension of the EU's Stability and Growth Pact, Malta has plenty of legroom in terms of fiscal policy design and debt accumulation, allowing government to maintain the current tax regime for the coming years.

Key measures from the Budget 2021

  • Cost of living increase of €1.75 per week
  • Pensioners to get €5 increase per week, including COLA
  • An additional day of vacation leave will be granted to employees
  • Tax refund scheme to be maintained and increased
  • Second round of vouchers - €60 for restaurants and €40 for services and goods
  • Extension of wage supplement scheme till end of March 2021
  • €70 and €50 increase in children's allowances
  • Higher thresholds for in-work benefit eligibility
  • Increase in supplementary allowance between €70 and €108
  • Additional disability benefit of €300 per year for parents entitled to disability allowance and who stop working due to children with a disability
  • Compensation for shipyard workers who fell ill or died due to asbestos
  • Free bus travel for elderly aged 70 and above
  • Extension of tax reductions on sale and purchase of properties 
  • Tax-free portion for first-time property buyers will increase to €200,000 from €175,000
  • Tax-free amount on property inherited increased to €250,000 from €200,000
  • Royalties on sale of books to be taxed at flat 15% rate
  • VAT exempt threshold to increase to €30,000 from €20,000
  • Grants equivalent to the tax paid on sale for farmers and fishermen selling at vegetable and fish markets
  • Importation of single-use plastics to stop next year, retail sales to end in 2022
  • €20 million in funding to ensure state schools adhere to COVID-19 protocols