Issue link: https://maltatoday.uberflip.com/i/1422707
IN Lewis Carroll's "Alice's Adventures in Wonderland, the heroine falls down the rabbit hole which lands her in Wonder- land. In our case, reading the budget pro- posals for next year as announced by the finance minister and comparing same with a loftier version by the Opposition leader gives her a surreal feeling that she is entering a Wonderland of contrasting economic scenarios. Some may label the tantalizing expe- rience as if we woke up from a psyche- delic dream. Going down the rabbit hole is a metaphor for a journey into the unknown, as Alice is now invited to comment which is the most sustainable budget on offer. Alice's mindset like that of voters is childlike, distractible so she begins to piece together a perfect Malta where she can live and prosper. is ar- ticle includes two main fictional charac- ters of Tweedle Dee and Tweedle Dum. Like in the book "Alice in Wonderland", local voters are facing a blitz of whole- some promises which if enacted will lead them to a new world of unknown be- nevolence. As Alice progresses through reading budget proposals, she loses her sense of identity, just as the party faithful feel when they idolize their leader. A comparison of budget proposals of- fered by the government and those com- posed by the Opposition - makes an in- dividual set off on a quest to reach the golden pot at the end of the rainbow. Let us try to compare and contrast the sali- ent topics of both budgets. Such budg- ets have to be evaluated after taking into consideration the economic contraction last year now poised to stage a partial re- covery in 2022. At the end of October 2021, Alice dis- covers that the cookie jam is empty and questions how prolific was the state when discovering Government debt crept up to €7,989 million. e austerity suffered by retail and hospitality in 2020 due to the onset of lockdowns and cur- fews had gradually eased in the first half of 2021 and perhaps this is the cherry on the cake which spurned ambitious budg- ets for 2022. One of the jewels in the crown that helped mitigate a severe economic downfall was the resilience of the Finan- cial Services sector. is accounted for 8.4 per cent of gross value added and since 2010 increased by an average of 8.8 per cent each year. Over the yeats, Malta has successfully attracted key interna- tional players in Financial Services, sup- ported by the continuous improvement in the ease of doing business, a strong regulatory environment, unhindered ac- cess to the EU market, a long tradition of business support services especially auditing and legal services, enhanced tax competitiveness and the availability of skilled and English-speaking workforce. For a small island, which prides itself of twenty-six banks, including three branches of foreign banks and for- eign-owned credit institutions amidst a number of international insurance and funds companies - surely grey listing is anathema to maintain thr status quo. Back to the budget theme, both cham- pions wax lyrical about the need to ride the digital bandwagon. EU funds will be made available under the RRP scheme to improve mobile digital connectivity and infrastructure. is needs immediate at- tention as Malta ranks low in the 2021 Digital Quality of Life Survey - taken among 110 countries. Let us peep into what Tweedle Dee (aka the Opposition leader) proposed to chal- lenge the version previously proposed by the Tweedle Dum (aka the minister of finance). Tweedle Dee promised travel vouchers for all young people, automatic pension increases at twice the cost of liv- ing adjustment, and lower tax for those earning between €60,000 and €80,000. A novelty was the extension of the 25% tax bracket to all those earning up to €80,000. More fun down the rabbit hole as the VAT exempt bracket goes up to €60,000, benefitting many small businesses. As the illuminati at MCESD dare not change the COLA mechanism so Tweedle Dee smartly conceded an au- tomatic pension increase of double the annual COLA rate. Students to receive a 10% raise in annual stipends plus a €500 travel voucher. No recipe for a delicious budget pud- ding would be complete unless the menu parades a universal living wage. Appren- tices will relish the re-establishment of trade schools. Frontliners and hospital staff will receive a recognition towards their excellent work partaking of a €14 million bonus - equally shared as a thank-you gift. On tourism, Tweedle Dee will reduce VAT on restaurant and hotel services to 7%. Wellbeing is paramount and hey presto, Alice welcomes family friendly measures such as 15 days of paternity leave and eight weeks of parental leave. She walks in the garden of Wonders overwhelmed by the generosity of a cor- nucopia of goodies conjured by Tweedle Dee. Certainly, this outshines the menu of- fered by Tweedle Dum (yet, none ques- tion whether it is sustainable). e latter is seen with a smirk on his face as he an- nounced a surprise delicacy that took the biscuit. e shrewd economist added an ECOHIVE bombshell that left Tweedle Dee holding his breath. is waste-to-Energy plant forms part of a series of ecological projects with an investment of around €200 million. When in operation it will process waste that cannot easily be recycled. is treats 40% non-recyclable waste diverting it away from landfill disposal. Nothing pro- posed by the Tweedle Dee match the en- vironmental marvel of ECOHIVE , hav- ing an annual capacity to treat 192,000 tonnes of waste. More sensations hit Alice when she discovered the exclusive Material Recovery Facility sporting an annual capacity of 70,000 tonnes. is magical machine also converts waste into biogas so farmers will be giv- en free quality compost. All hazardous waste such as clinical and pharmaceu- tical material will be processed and free heat energy released. ere are too many bright ideas in Tweedle Dum's hat to dis- close in this short article. A typical example includes a conces- sion for companies to be able to transfer capital allowances which arose in 2020 and 2021 and remained unabsorbed due to reduced profitability caused by the COVID-19 pandemic to other group companies. Last but not least, there is tax relief on the first €750,000 on sale and purchase of a vacant property within the Urban Con- servation Area or has heritage value. e overflowing cookie jar includes a grant of €15,000 (Gozo €30,000) to property buy- ers. Workers rejoice as tax on the first €10,000 of overtime will be at a reduced rate of 15%. is kaleidoscope of goodies on offer by the finance minister vs Opposition leader has left Alice in a befuddled state. She will try to dig herself out of the rab- bit hole to reach the surface where reality starts and Utopia ends. Alice compares and contrasts budgets on offer George Mangion George Mangion is a senior partner of an audit and consultancy firm, and has over 25 years experience in accounting, taxation, financial and consultancy services. His efforts have seen PKF being instrumental in establishing many companies in Malta and ensured PKF become one of the foremost professional financial service providers on the Island 8 OPINION 28.10.2021