[WATCH] Clyde Caruana continues to rule out tax increases for economic recovery

Xtra on TVM | The Finance Minister insists that government should make sure that it is collecting all tax due to it

Finance Minister Clyde Caruana on Xtra
Finance Minister Clyde Caruana on Xtra

Finance Minister Clyde Caruana said that tax increases will not be the way forward under his watch, and that government must first ensure that it is collecting all tax due to it.

Thursday’s episode of XTRA saw the economy and government finance take centre stage, with Caruana and Opposition Spokesperson Mario De Marco.

On the €1.3 billion deficit, Caruana said that the deficit will be substantial, but necessary. Tourism still needs to experience recovery, and this won’t happen from one day to another. 

“If we don’t strengthen tourism now, when the sector needs it most, the sector will take a blow that won’t be easy to recover from.”

Caruana added that the stable public finances enjoyed in the years prior to the pandemic allowed government to spend now without raising taxes immediately.

“I’m confident that we'll slowly experience again that same way of life we were living before, and the economic rhythm we had before."

He remained adamant on not resorting to increasing taxes in the near future, instead arguing that government should make sure that it can collect all tax due to it to make the most of the current tax base.

“Eventually, the government needs to see that everything that has to be collected, is collected. There is potential for government to collect what it has to collect without introducing new burdens,” he said. 

Caruana explained that this collection of what is owed to government, in the form of unpaid taxes and national insurance, could help alleviate the deficit burden.

On the other hand, De Marco didn’t hold back on what the Nationalist Party would have done different had it been in government throughout the pandemic.

“We would’ve kept more of a check on our recurrent expenditures,” he said. “The recurrent expenditure went so high for government so much that it gave government less space for manoeuvring when offering help and assistance to the economy.”

He noted a €20 million aid package announced by government last week, saying that it was “too little” to offer any help to businesses.

De Marco went on to reiterate previous measures suggested by the Nationalist Party, including the lowering of the VAT to 7% for restaurants, while also offering more tax incentives.

Caruana’s foreign labour strategy

Having chaired Jobsplus for several years, Clyde Caruana was at the forefront of Malta’s foreign labour policy, which saw an influx of economic migrants coming to Maltese shores.

Now, Caruana is tasked with drafting a National Employment Strategy.

He said that everything is still being draft, but the national employment strategy will be finalised and published before this year’s budget.

Among the proposals to be put forward by his ministry, better wages and increased female participation in the workforce will be tackled.

Mario De Marco expressed criticism of the Labour Party’s foreign labour policy, arguing that workers were being brought to Malta because they could be paid lower wages, keeping local wages low.

He argued too that one needs to calculate Malta’s carrying capacity before encouraging foreign workers to migrate to Malta en masse.

"How many foreign workers can our small country take from a sustainability level, in terms of health, education, infrastructure and traffic?" he questioned.