Issue link: https://maltatoday.uberflip.com/i/1547002
3 maltatoday | SUNDAY • 4 OCTOBER 2026 NEWS CONTINUES FROM PAGE 1 When announcing the super bonus pledge on 4 May, Prime Minister Robert Abela insist- ed the PL was able to assure implementation of its propos- als despite the conflict in the Middle East. Crucially, he even suggested the worst of the cri- sis "may still be ahead". Roll forward four months and the upbeat tone has changed into a cautionary one with the finance minister positing what appears to be a stark choice— subsidies or the super bonus. The deficit and pragmatism At all costs, Caruana does not want the public deficit to go beyond the 3% benchmark. He called this a "sacrosanct" goal since he does not want the Eu- ropean Commission to come breathing down his neck. The new deficit forecast for 2026 is 2.8%, which is higher than the European Commis- sion's Spring Forecast of 2.2% but still below the 3% thresh- old. Caruana wants to maintain a similar outlook for next year. At the same time, he also wants to retain the energy sub- sidies "come what may" be- cause removing them would be "catastrophic" for families and the economy. Nonetheless, even though ac- knowledging the fact that uni- form subsidies can encourage waste by some and also benefit- ted those who afford to shoul- der the burden, the minister defends the indiscriminate use of subsidies. "My pragmatic economist side prevails over my socialist ideals if removing subsidies on those who can afford to shoulder the burden of higher fuel pric- es leads to negative economic sentiment," Caruana said when asked by MaltaToday during the launch of the pre-budget document, whether it was fair for boat owners making trips to Sicily to benefit from the same subsidised diesel as ordinary people. Within this scenario, the fi- nance minister knows that keeping the deficit in check would be hard to achieve if a €200 million outlay on the su- per bonus is layered on top of a €400 million energy subsidy, and the second and third par- ent tax cuts due in 2027 and 2028. The finance minister is prob- ably looking at a two-year ho- rizon over which oil prices will drop, freeing up more financial resources to finance the super bonus. The Labour Party will definitely want to fulfil the pledge in time for the Europe- an Parliament election in 2029. But although prudence and responsibility are dictating Caruana's logic now, the strat- egy is not without political risk. The calculator and Hormuz Only four months ago, Caru- ana was all over social media with his calculator telling vot- ers how the super bonus would work. The pledge was simple: A €1,000 non-taxable money transfer every year to all work- ers, who have at least resided in Malta for five years. And those earning less than €12,000 annually will receive the bo- nus on a pro rata basis with a minimum of €500 guaranteed. Workers, working pensioners and students would all benefit. The electorate was told the €200 million outlay on the super bonus was affordable alongside the energy subsidies despite the ongoing war in the Persian Gulf that disrupted the Strait of Hormuz. Prime Minis- ter Robert Abela had even used the US-Iran war to justify call- ing an early election and many voters understood that the su- per bonus will start being paid out from the first budget. Whether Caruana changes his mind from now until budget day on 26 October remains to be seen. He may be encouraged by the decision of G7 coun- tries on Friday to release up to 100 million barrels of die- sel and crude oil from strate- gic reserves over the next four months in an effort to bring down energy prices. But while Caruana's gaze will be fixed on the oil markets and how they will adjust going forward, for many, a forfeited super bonus will have the hall- marks of a bitter déjà vu. The Gonzi pledge In February 2008 and with polls not in his favour, Law- rence Gonzi stood before the electorate to promise a signif- icant income tax cut. The top 35% rate would only be levied on those who earn more than €60,000 thus benefitting a large swathe of middle-class voters. It was the Nationalist Party's key election pledge. The global financial crisis that shook the world in the following years was already vis- ible on the horizon. But when faced with questions about the pledge's affordability in view of the impending crisis, Gonzi posited the tax cut as the solu- tion; an antidote. The PN went on to win the election by a whisker but the hefty tax cut kept being post- poned because the economy tanked and the deficit shot up. The tax cut was eventually an- nounced in the last budget but the PN never got to implement it. The budget was voted down after Franco Debono broke ranks and the pledge remained unfulfilled. It was the incoming Labour government in March 2013 that delivered the PN promise when it passed an emergency budget upon taking office that was largely modelled on the budget voted down months earlier. All this is history but roll for- ward to September 2026 and despite Malta having a health- ier economy and stronger pub- lic finances, the forfeiture of a key election pledge remains uncannily similar. Evidently conscious of the ig- noble comparison people could draw with the PN's 2008 failure to honour its tax cut pledge, Caruana insisted during his presentation that he will "defi- nitely" not leave implementa- tion of the super bonus pledge until the last year. He said so with a smile. Whether it will satisfy voters is another matter altogether. Finance minister vows to retain energy subsidies 'come what may' 'My pragmatic economist side prevails over my socialist ideals if removing subsidies on those who can afford to shoulder the burden of higher fuel prices leads to negative economic sentiment' Clyde Caruana's hint that the super bonus, the Labour Party's flagship election promise, will not make it into this legislature's first budget has opened Pandora's Box