Labour planning new taxes to finance utility bills’ cuts – Fenech

Shadow finance minister Tonio Fenech has poured cold water over Labour plans to further reduce the deficit to below 3% in 2014 through measures aimed at creating economic growth.

Fenech, who was speaking at a joint press conference alongside Simon Busutill and Mario de Marco critisised the government for going against its electoral promise of countering the national deficit with economic growth.

“We're seeing the opposite of what they’ve promised seven months since their election. They are saying one thing and doing another,” Fenech said. "Instead of economic growth, Edward Scicluna is proposing new taxes and government fees of office that will amount to some €50 million. It's a phenomenal U-turn in Labour's economic and financial policy," Fenech said.

“The government’s credibility is questionable, to say the least.  We need more transparency in such matters. After all, we expect that if promises were made, they must be kept,” he said.

A document submitted by the government to the European Commission suggests that Budget 2014 may include an increase in direct taxation. While income tax cuts will see €40 million less generated in revenues for the exchequer over three years, the government will announce €31.5 million in a series of new indirect taxes, and €15 million in new government fees where services will be offered against a fee.

"It was Joseph Muscat who chose to push the country into an excessive deficit procedure," Fenech said of Malta's entry into the European Commission's corrective procedure for high deficits. In April 2013 finance minister Edward Scicluna corrected Fenech's own forecast in November 2012, adjusting a 1.7% deficit forecast to 2.7% due to "fiscal slippage". Scicluna says he will manage to keep the deficit at 2.7% for 2013, although EC forecasts believe it will rise to 3.6%.

"The government was forced to take completely different decisions... but no previous policy had sought to collect over €50 million," Fenech said. “This government promised in its electoral programme that it was going to balance out the country’s deficit with economic growth. Clearly, it is saying one thing but doing something completely different.”

The Nationalist MP said the measures included an increase in duty on fuels, and a series of indirect taxes to be announced in the upcoming Budget. "The consolation prize is not that VAT will not be increased, but whether there will be a reduction of the tax burden. We ask what these taxes are, and who will be hit by these taxes."

Fenech asked which government fees of office will be increased to bring in €15 million, when in 2013 these totaled around €19 million on their own. "Government's first decision was to reduce MEPA fees, so from where will they get this money: transport, health, education, MEPA?

"Why does the government need all these taxes? Because of a financial problem - not according to the EC report. Is it to uphold the promise of reducing utility bills? If so, it's a brazen-faced joke."