Issue link: https://maltatoday.uberflip.com/i/1410377
2 NEWS maltatoday | WEDNESDAY • 15 SEPTEMBER 2021 2 NEWS BUDGET 2022 Pandemic punches €1.5 billion hole in public finances but minister pledges no new taxes LUKE VELLA THE next budget and the sub- sequent ones will not introduce any new taxes, Finance Minis- ter Clyde Caruana has said, re- iterating a pledge made several months ago. Caruana was unveiling the pre-budget document on Tues- day with the theme, 'What country would you like to leave for your children?' This will be the first budget for Caruana, who was co-opted into parliament and made fi- nance minister in late 2020. Caruana said that the pan- demic left a mark on every country, and it presented the world with the biggest chal- lenges since World War II. According to Caruana, Malta had seen economic growth of 7.2% between 2015 and 2019 and a contraction of 8.3% in 2020 due to the pandemic. He said that the forecasted economic growth will be 6% in 2021 (3.8% in real terms) and 4.9% in 2022 (6.8% in real terms). He also reiterated that the employment figures decreased steadily during 2021 and have gone below the 2019 level, to 3.3% in July. Caruana noted that the action of the government during the pandemic cost the country mil- lions that it afforded. He said that apart from a sharp increase in expenditure, the country's revenue also decreased. Caruana stated that until the end of 2021, the pandemic would have cost the country a total of €1.5 billion. The debt-to-GDP ratio for 2021 was 65%, and it is fore- casted to reach 65.8% in 2022. Caruana emphasised the im- portance of the labour market in the economy and said that work was almost ready for a new political strategy for the market. He mentioned the making- work-pay strategy "achieve- ment" that saw people depend- ant on social benefits go down from 15,000 in 2013 to 6,500 in 2020. The risk of poverty or social exclusion in Malta was limit- ed to 20.1% of the population, while the EU27 average stands at 20.9%, said Caruana. Pension expenditure rose over eight years by nearly 40% and now amounts to 6.5% of GDP, and Caruana remarked that pensions are vital for the battle against poverty. He also said that the quality of life is also essential and noted that the reduction by 19% of carbon emissions by 2030 is a way forward. Healthcare is the govern- ment's biggest expenditure, said Caruana adding that everyone expects a quality of life as a right. Compared to 2010, the healthcare expend- iture has more than doubled, and he announced that the budget would introduce a new list of free medicines. Caruana also said that the government would be embark- ing on an exercise that would clamp down on abuses related to VAT evasion. He said that he wants to see economic de- velopment and not just eco- nomic growth, leading to a bet- ter quality of life. When asked whether the ob- ligatory education will go up to 18 years of age, Caruana said that the government has no plans for that and wants to fo- cus on targeted training for the labour market. Budget 2022 will focus on improving quality of life, economic development and clamping down on tax evasion, Finance Minister Clyde Caruana says LUKE VELLA POLITICAL parties will not be spared by government's efforts to step up the fight against tax eva- sion and collecting overdue arrears, Clyde Caruana said. The Finance Minister said on Tues- day that the forthcoming budget will propose ways of addressing the issue of tax arrears. When unveiling the pre-budget document, Caruana said no new tax- es or tax hikes will be introduced in the foreseeable future but greater ef- forts will be made to clamp down on tax evasion and collect what is due. "This has to be done for the bene- fit of the country... rest assured that I will give this issue its utmost im- portance," Caruana said when asked whether government's drive against tax evasion should start with the po- litical parties themselves. It recently came to light that the PL and PN owe more than €5 million in unpaid VAT, mostly accruing from their respective media organisations. Recently, in an interview with Sav- iour Balzan, the director of the Fi- nancial Intelligence Analysis Unit, Kenneth Farrugia, also said that for- eign companies registered in Malta will face heightened scrutiny for se- rious tax evasion. Malta agreed with the FATF to im- plement a plan of action by January 2023 in response to the greylisting. Caruana said the country had enough resources to avoid raising taxes but not all the money was making it into government coffers. He said the budget will include measures to combat tax evasion and propose a way forward to tackle tax overdues, including those by the po- litical parties. Political parties will not be spared in tax collection drive, Finance Minister warns