PN’s election pledges tot up to €180 million spend… and counting

Bernard Grech’s election proposals could cost anything between €160 million and €180 million, an exercise undertaken by MaltaToday shows.

The approximate figures only account for six significant proposals announced by Grech during his reaction to the budget on Monday.

The proposals considered for this exercise are: the extension of the 25% income tax bracket to those earning €80,0000; the travel voucher for young people between 16 and 21; the bonus for front liners; the refund for overcharged utility bills; the VAT cut to 7% on hotels and restaurants; and the ‘substantial’ increase in teachers’ salaries.

The Nationalist Party’s proposal to extend the VAT-exempt threshold to €60,000 from €30,000 and the increase of 25% in stipends for students in certain courses have not been included in the exercise because of the difficulty to establish existing parameters.

If these two measures are taken into account it is very plausible that the PN’s electoral manifesto bill will surpass the €200 million mark, excluding any capital projects.

The extent of the PN’s expense jars with its criticism of the government for running up a large deficit.

Depending on the percentage increase in salaries for teachers, the costings for these six proposals range between €162,065,000 and €182,365,000.

COSTINGS

1. Extension of 25% tax bracket: €10 million

A PN government will, in its first budget, extend the 25% income tax bracket to benefit those who earn up to €80,000. As things stand today, the 25% bracket applies to those earning up to €60,000.

This measure will benefit high earners and could possibly encourage professionals who under-declare their earnings to be more honest about their income.

Grech did not quantify the loss of income government would incur as a result of this measure.

Sources privy to the tax system told MaltaToday that as things stand today, the PN proposal would cost public coffers €10 million in lost revenue.

2. Teachers salary increase: €30 million to €51 million

Bernard Grech has pledged that educators will receive “a substantial” increase in their salaries under a PN government but has so far failed to explain what this means. He did not flesh out the proposal further during the budget speech and the cost of this pledge remains unknown.

According to Budget 2022, the expense on wages and salaries in the education sector will be €203 million. If Grech’s pledge represents a 15% increase in this bill, the additional cost will amount to €30,450,000. If Grech’s promise represents a 25% increase in salaries, the additional cost to public coffers will tot up to €50,750,000.

3. VAT cut to 7% on tourism: €45 million

Another pledge made by Grech is to cut the VAT rate on restaurants and hotel services to 7% from 18%. The Opposition leader did not quantify the cost of this measure but a 2009 study by the finance ministry at the time had put the cost of such a measure at €30 million. However, sources within the sector told MaltaToday that the amount would today be closer to €45 million given the higher levels of consumption.

4. ARMS refund: €50 million

The PN is pledging to refund overcharged utility bills, which according to estimates derived from the findings of a National Audit Office report could amount to around €50 million. Grech reiterated this pledge during his budget reaction. Government has acknowledged that the billing system for water and electricity need to change but will not refund any overcharging.

5. Bonus for front liners: €14 million

Bernard Grech has promised COVID-19 front liners a one-off bonus as appreciation for their work during the pandemic. Grech identified certain sectors who will receive the token bonus and quantified this at €14 million.

6. Travel voucher for youngsters: €13 million

A new PN government will give young people between the ages of 16 and 21 a €500 voucher to travel abroad for educational, cultural and sports purposes. Grech did not quantify the cost of this measure.

MaltaToday looked at the NSO population statistics, which show that there are 25,230 young people between the ages of 16 and 21. With each given a voucher of €500, the PN measure will cost taxpayers €12,615,000.