Reactions to Budget 2014

From construction developers to the Green Party, here’s how they welcomed yesterday’s Budget 2014

Joseph Muscat's government's first official budget was intended at keeping the electorate happy
Joseph Muscat's government's first official budget was intended at keeping the electorate happy

Developers 'satisifed'

The Malta Developers Association said government had recognised the need for a thrust in the property market and ensuring a level-playing field in the sector, and tackle tax evasion.

They made special mention of the 15% withholding tax on rent, the waiving of stamp duty for first-time buyers, the end of evaluations of property values by government architects, and a new structure aimed at encouraging the sale of property to foreigners through marketing campaigns abroad.

The MDA also welcomed the proposed pilot project for Valletta so that the country can begin taking steps to rehabilitate and utilise abandoned property in our capital city.

MHRA: motivates work but short on tourism investment

The Malta Hotels and Restaurants Association said it welcomed the policy of incentivising work for unemployed people to re-enter the job market, as well as for part-timers, women, job placements for youths, and income tax reductions.

But MHRA noted that in 2013 the expected arrivals to Malta would exceed 1.5 million or 100,000 more arrivals resulting in an additional €45 million in multiplier revenues.

"MHRA regrets to note that despite the call to the previous and current government to reduce the VAT rate from 7% to 5%, to allow enough resources for the embellishment and renovation of the hotel product, this has not happened."

MHRA said it was concerned that the tourism product would suffer, sending the industry in a downwards spiral.

MHRA welcomed the confirmation of the reduction of energy and water tariffs.

Employers say budget gives continuity and stability

The MEA said Budget 2014 linked up with those of previous years, reflecting both the resilience of the economy and the limited room for manoeuvrability by the government.

"There are no major changes from what happened before, except for the introduction of focused measures aimed towards particular sectors of society and issues. The budget also aims to address concretely the national deficit with projections to take Malta out of the excessive deficit procedure through a reduction of the deficit to 2.1% during 2014."

The MEA said the budget included a number of supply-side measures aimed at increasing the number of productive hours through a higher participation rate of labour in the economy: free childcare, subsidised childcare in private institutions and further tax incentives to families with children.

"It looks like the budget seeks to strike a balance between the net effect of increased direct taxation vis a vis the increased disposable income arising from the reduced income tax rates, income from part- time employment and the reduction in energy rates," MEA said.

MEA also welcomed the re-introduction of the micro-invest scheme, which, in conjunction with other schemes served to incentivise small businesses.

MEA disagreed in principle with the concept of the temporary retention of part of the social benefits by unemployed persons in addition to their salary earned from the new found job.

The MEA said it would have wanted to see the establishment of a minimum rate for government-outsourced work, which it had proposed in agreement with the GWU to reduce employment abuses. It said the intention to adopt the idea of a services charter was still a step in the right direction.

GWU - Fair budget with a social heart

The General Workers' Union (GWU) welcomed the Budget incentives and said this was a fair budget with a social heart, that showed government's commitment to consolidate economic growth and fiscal and social stability.

"This Budget is based on principles of social justice," the union said, satisifed that several of its proposals had been included. "In March 2014, the electoral promise that the electricity and water bills will be reduced by 25% and 5% respectively will be implemented. The GWU recalls that it was the first organisation to protest against the high tariffs imposed by the previous administration."

Chamber of Commerce: commitment towards public finance consolidation

The Chamber of Commerce welcomed a declared commitment towards public finance consolidation, saying the schedule to reduce the government deficit and the announced safeguards are positive.

The Chamber also welcomed the introduction of voluntary third pillar pensions to supplement the current PAYE (pay as you go) system, which it said was expected to contribute towards better sustainability of the pensions system and public finances in general.

The Chamber also supported the income tax cuts and their shit to indirect taxation, but it said it was clear that Malta had a poor track record in enforcing payment of indirect taxes. "The country still lacks a fair and effective structure for market surveillance."

In fact it said that without the necessary safeguards and enforcement, the increases in some indirect taxes would fuel further abuse and unfair competition between honest and dishonest operators. "For this reason, the Chamber welcomes government's announced evaluation of Eco-Contribution. The Chamber's stand on the matter is that this tax should be eliminated because, so far, it could not be effectively enforced."

The Chamber also welcomed measures to promote female participation in the labour market particularly through childcare support and the tweaking of tax and fiscal benefit rules to make work pay for certain cohorts of workers.

Greens say budget lacks focus

Alternattiva Demokatika questioned the foundations of Budget 2014, saying it was unclear whether the projections for taxation revenues in 2014 were too optimistic.

AD chairperson Arnold Cassola said that since projections in June for VAT and income tax revenues were lower than estimated, it was unclear whether revenues in 2014 would make up for any eventual shortfall.

Cassola also called on finance minister to publish the Auditor General's report on the verification of budgetary projections.

Cassola said AD saw the opening of childcare centres, the concept of 'making work pay' and the proposals for youth guarantees and apprenticeships as positive.

But he said the budget overall lacked a clear focus and that much of the speech had spared details on the proposals, even concrete proposals.

"In some areas there is no clear direction. An example is where authorities and government commissions are involved, where instead of simplifying the government is complicating matters. In a small country, instead of consolidating its authorities, the government is spreading out its resources with new government organisations. An example was the creation of a national authority for aviation, which will once again be severed from Transport Malta," Cassola said.

Another contradiction was that the protection of the coastline had earned a mention in the budget whilst the government appeared intent on protecting the land squatting of the Armier boathouse owners. "The government mentions the monitoring of air quality but at the same time it will increase the traffic to Valletta and reduce the payment on car registration."

Cassola said that any measures that would increase traffic to Valletta were a sure sign that the government was intent on not providing a proper public transport system. "There is no mention to encourage alternative transport, or ideas how to improve the public transport system."

Cassola also said that while taxes for those who earn the most will be cut, persons with a disability who earn a miserable pension of less than half the minimum wage had been ignored. "At the same time, the minimum wage will stay the same, when entire families live in poverty."

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