Finance minister hits out at economic ‘misinformation’

Finance Minister Edward Scicluna today lashed out at the systematic "misinformation on economic data" which he partly blamed on the National Statistics Office.

Scicluna said he was "irritated" by the constant reports in the media reports that erroneously show that inflation and unemployment are on the rise.

However, the minister blamed these incorrect reports on the way the National Statistics Office (NSO) releases information to the press.

"Today, one particular newspaper reported that inflation had increased, however in reality, inflation is at its lowest rate in a very long time. In August inflation stood at 0.6% however for some reason the NSO highlights the moving average instead of the latest rate of inflation. Its like  going to a doctor to check your blood pressure and instead of being told what your blood pressure is at the moment, you are given an average of the past year."

Scicluna also hit out at a journalist "with a known agenda," and challenged him to publish the video recording of an interview held last week in which he reportedly said that taxes would be raised in next month's budget.

In his attack, understood to be addressed towards Times journalist Ivan Camilleri who interviewed the minister on Friday, Scicluna denied that he confirmed a plan to introduce new indirect taxes in the next Budget to yield an extra €50 million in revenue during 2014.

However, while addressing the MCESD members this morning, Scicluna said that an increase in indirect taxation was the only way government could make up for a €50 million cut in its expenditure as a result of the government's efforts to push the deficit below the 3% mark.

Earlier this month, in its report to the European Commission, the government stated that "For the period 2013 to 2016, the gradual losses from the revision in the income tax regime affecting direct taxation will be offset by similar gradual revisions in indirect taxation planned in the context of  the budgetary exercise for the upcoming year."

The minister was speaking during an MCESD meeting during which the social partners presented their proposals for the 2014 budget.

Noting that "current revenue is not matching expenditure," Scicluna said that new measures need to be introduced to make up ground without increasing the national debt.

Reiterating the government's commitment to reduce the deficit below 3% of GDP, Scicluna said that government would be borrowing €50 million less and this had to be balanced out by an increase in indirect taxation.

He added that the tax wedge - the difference between labour costs on employers and the corresponding net wages of employees - had to be shortened, and this could only be achieved by shifting taxation from labour to consumption.

However, social programmes, Scicluna pointed out, would need to be introduced to soften the effects of such measures, which will be implemented "gradually."

The finance minister also underlined the government's main targets in the 2014 Budget; fostering economic growth, introducing social measures which are not a burden on the state and push people into employment and introducing measures to uphold social justice.