Karmenu Vella, 'deficit brought down by postponed pensions'

Labour spokesperson for finance Karmenu Vella has poured cold water over NSO data showing government's deficit has fallen by €34 million.

He said a deeper analysis was required since government had spent €17 million less on social benefits. “If the reduction was due to successes in the fight against certain abuses, the minister would be correct in celebrating,” Vella said.

Vella said according to government statements the expense on pensions should be increasing, not decreasing. "Lawrence Gonzi even appointed a commissioner to solve the problem, even if five years ago the measures taken solved nothing. One cannot but conclude that that half of the deficit reduction for the first three months is not real, but simply that certain pension payments were postponed from being paid out in the first three years,” he said.

Vella also said that an increase in €21 million in VAT revenues indicated greater consumption, but he pointed out that consumption in 2009 dropped by 1.4%, while in 2010 it dropped by a further 0.7%. “Aside from this, Eurostat figures published this week show that general trading between December 2010 and March 2010 dropped every month by an average of 6% - when the EU average is around 0.7% ever month.”

Vella said that Finance Minister Tonio Feench had confirmed in parliament that the increase in VAT income of certain months was due to a change in the timeframe within which a large number of taxpayers had to make payments to the VAT department" and said the increase in revenues was not "a real increase".

“Aside from the fact that Lawrence Gonzi and Tonio Fenech are claiming that the expenditure on the City Gate project will be financed from a fund that has not been set up yet, according to them €40 million has already been paid in advance.”

Vella said this expense will not be considered in the government’s books, “but ultimately it is the taxpayer who is financing them, as these funds would have helped government reduce the deficit, resulting in less of a need to gather more taxes.”