Budget reactions: What does Malta think?

On Monday, Finance Minister Clyde Caruana headed to parliament with his red briefcase in hand to present the 2027 Budget.

Measures ranged from the much-anticipated super bonus and pension increases to tax changes and controversial new measures affecting third-country nationals.

The announcements have since sparked a wave of reactions, with organisations and stakeholders welcoming some measures, criticising others, and calling for changes.

Malta Chamber: Key issues left unaddressed

While welcoming the budget's support for families and pensioners, the Malta Chamber of Commerce said it failed to outline how government intends to transform the economy and address Malta’s productivity problem.

The chamber noted that much-needed reforms in education and skills, planning, public procurement, cross-sectoral enforcement and the reduction of unnecessary bureaucracy across public entities were also left unaddressed.

It also raised concerns over the lack of measures to tackle Malta’s persistent traffic problems.

The chamber described the increase in work permit fees for third-country nationals (TCNs) as a disincentive for businesses that rely on foreign workers, arguing that the measure appeared to be more of a revenue-generating exercise than an economic policy tool.

It also pointed to a lack of clarity on incentives to help businesses digitalise, arguing that such schemes are needed to offset the additional financial burdens on TCNs, which are likely to be passed on to employers.

The chamber welcomed the increase in the eco-tax paid by tourists, provided that the revenue generated is reinvested in improving Malta’s tourism product and localities.

Żminijietna: ‘Protect workers regardless of nationality’

NGO Żminijietna warned that measures targeting TCNs risk driving workers away from Malta, worsening labour shortages across several fundamental sectors.

“TCNs make an important contribution to Malta’s economy and essential services,” it explained. “Any policy that increases their expenses without adequate compensation risks affecting both workers and the sectors that depend on them.”

Trade unions, it said, will need to negotiate better wages and improved working conditions to ensure that workers can meet rising expenses and maintain a decent standard of living.

At the same time, Żminijietna said employers must recognise that retaining workers requires fair pay, dignity, and security.

It called for stronger collective bargaining, fair wage increases, and policies that protect all workers regardless of nationality.

TCN measures risk cost increases, Chamber of SMEs warns

The Malta Chamber of SMEs warned that measures targeting TCNs could increase costs for employers and worsen existing labour shortages.

It specifically criticised the removal of free childcare eligibility for TCN workers and increases in single permit and infrastructure fees, arguing that the measures would place additional financial burdens on businesses.

The chamber also expressed disappointment over the lack of concrete incentives to improve productivity, despite government's emphasis on strengthening Malta's economic competitiveness.

It pointed to persistent labour shortages, traffic congestion, unfair competition, and inflation, which all remained insufficiently addressed.

However, the chamber welcomed the reduction in corporate tax from 35% to 25% for businesses with a turnover of up to €1 million, calling for the measure to be extended further.

It also praised the continuation of energy subsidies, noting that almost 80% of businesses surveyed in its latest SME Barometer considered them essential or moderately important.

GWU welcomes cost-of-living measures, calls for better working conditions

The General Workers’ Union (GWU) welcomed Budget 2027 measures aimed at strengthening social protection and protecting purchasing power, including the €6.41 weekly COLA, a €10.41 weekly minimum wage increase including COLA, and a €10 weekly pension increase.

The union also welcomed the Super Bonus of up to €1,000, continued energy subsidies, free childcare and additional support for families and carers.

However, it called for further action on affordable housing, traffic congestion, public services, wages and working conditions, alongside greater investment in workers’ training to address digitalisation and artificial intelligence.

Regarding the withdrawal of free public transport for third-country nationals, the GWU said it was contacting recruitment companies to explore whether they could absorb part of the additional costs.

The union said economic growth must translate into better living standards for workers and their families, adding that its National Council will issue an official position after a detailed assessment of the Budget measures.

Gozo Tourism Association: Higher eco-tax risks disproportionately affecting Gozo

The Gozo Tourism Association (GTA) raised concerns over several budget measures affecting the tourism sector, warning that increased costs could undermine its competitiveness.

The association was particularly critical of government's decision to impose a higher eco-contribution on short-let accommodation than on hotels.

It argued that the measure would disproportionately affect Gozo, where approximately 72% of tourist bed capacity consists of short-let accommodation, including holiday apartments, farmhouses and villas, compared to just 28% in hotels.

The GTA also raised concerns that eco-contributions collected from accommodation establishments in Gozo are not ring-fenced for reinvestment in the island's tourism infrastructure and tourism product.

It further expressed disappointment over the lack of investment in improving inter-island connectivity, particularly the development of the rural airfield.

However, the association welcomed government's commitment to maintaining stable electricity, gas and fuel prices despite continued international energy market pressures.

It also supported efforts to attract tourists during the shoulder and winter months, describing such measures as essential to making Gozo's tourism sector more sustainable throughout the year.