Issue link: https://maltatoday.uberflip.com/i/205575
8 Budget 2014 maltatoday, TUESDAY, 5 NOVEMBER 2013 Reactions to Budget 2014 Developers 'satisifed' The Malta Developers Association said government had recognising the need for a thrust in the property market and ensuring a level-playing field in the sector, and tackle tax evasion. They made special mention of the 15% withholding tax on rent, the waiving of stamp duty for firsttime buyers, the end of evaluations of property values by government architects, and a new structure aimed at encouraging the sale of property to foreigners through marketing campaigns abroad. The MDA also welcomed the proposed pilot project for Valletta so that the country can begin taking steps to rehabilitate and utilise abandoned property in our capital city. MHRA: motivates work but short on tourism investment The Malta Hotels and Restaurants Association said it welcomed the policy of incentivising work for unemployed people to re-enter the job market, as well as for part-timers, women, job placements for youths, and income tax reductions. But MHRA noted that in 2013 the expected arrivals to Malta would exceed 1.5 million or 100,000 more arrivals resulting in an additional €45 million in multiplier revenues. "MHRA regrets to note that despite the call to the previous and current government to reduce the VAT rate from 7% to 5%, to allow enough resources for the embellishment and renovation of the hotel product, this has not happened." MHRA said it was concerned that the tourism product would suffer, sending the industry in a downwards spiral. MHRA welcomed the confirmation of the reduction of energy and water tariffs. Employers say budget gives continuity and stability The MEA said Budget 2014 linked up with those of previous years, reflecting both the resilience of the economy and the limited room for manoeuvrability by the government. "There are no major changes from what happened before, except for the introduction of focused measures aimed towards particular sectors of society and issues. The budget also aims to address concretely the national deficit with projections to take Malta out of the excessive deficit procedure through a reduction of the deficit to 2.1% during 2014." The MEA said the budget included a number of supply-side measures aimed at increasing the number of productive hours through a higher participation rate of labour in the economy: free childcare, subsidised childcare in private institutions and further tax incentives to families with children. "It looks like the budget seeks to strike a balance between the net effect of increased direct taxation vis a vis the increased disposable income arising from the reduced income tax rates, income from part- time employment and the reduction in energy rates," MEA said. MEA also welcomed the reintroduction of the micro-invest scheme, which, in conjunction with other schemes served to incentivise small businesses. MEA disagreed in principle with the concept of the temporary retention of part of the social benefits by unemployed persons in addition to their salary earned from the new found job. The MEA said it would have wanted to see the establishment of a minimum rate for government-outsourced work, which it had proposed in agreement with the GWU to reduce employment abuses. It said the intention to adopt the idea of a services charter was still a step in the right direction. GWU – Fair budget with a social heart The General Workers' Union (GWU) welcomed the Budget incentives and said this was a fair budget with a social heart, that showed government's commitment to consolidate economic growth and fiscal and social stability. "This Budget is based on principles of social justice," the union said, satisifed that several of its proposals had been included. "In March 2014, the electoral promise that the electricity and water bills will be reduced by 25% and 5% respectively will be implemented. The GWU recalls that it was the first organisation to protest against the high tariffs imposed by the previous administration." Chamber of Commerce: commitment towards public finance consolidation The Chamber of Commerce welcomed a declared commitment towards public finance consolidation, saying the schedule to reduce the government deficit and the announced safeguards are positive. The Chamber also welcomed the introduction of voluntary third pillar pensions to supplement the current PAYE (pay as you go) system, which it said was expected to contribute towards better sustainability of the pensions system and public finances in general. The Chamber also supported the income tax cuts and their shit to indirect taxation, but it said it was clear that Malta had a poor track record in enforcing payment of indirect taxes. "The country still lacks a fair and effective structure for market surveillance." In fact it said that without the necessary safeguards and enforcement, the increases in some indirect taxes would fuel further abuse and unfair competition between honest and dishonest operators. "For this reason, the Chamber welcomes government's announced evaluation of Eco-Contribution. The Chamber's stand on the matter is that this tax should be eliminated because, so far, it could not be effectively enforced." The Chamber also welcomed measures to promote female participation in the labour market particularly through childcare support and the tweaking of tax and fiscal benefit rules to make work pay for certain cohorts of workers. €3.5 million will be allocated for the return of vehicle registration tax paid between 2004 and 2008 tioned. The government will be revising its national strategy for tourism. It also aims to diversify the market by attracting tourists from the United States, China and Russia while consolidating existing markets like the German one. The rehabilitation of village cores could also create opportunities to turn palazzini in to tourist accommodation. Air Malta The government will hold the current management of Air Malta "responsible' for the restructuring process. "After €40 million euro were passed on to Air Malta a further €15 million are to be allocated next year… Tax payers expect results for this." Shop opening hours The budget announces a reform of laws regulating shop-opening hours aimed at increasing competitiveness and improving services for consumers. But no details are offered on the prospective reform, which will be concretised in a white paper issued at a later stage. According to the budget a balance is needed between safeguarding the free time of shop owners and the needs of families especially those where the two partners work, who find it difficult to buy in traditional times. One of the ideas being explored is whether to leave it up to shop owners to choose the days in which their shops will be closed. The idea of introducing night shops will be explored. But the rights of workers will also have to be safeguarded. The government will seek feedback from stakeholders before taking decisions on this issue. Interest rates charged by banks The government is concerned by the high rates of interests charged by banks on medium- and small-sized companies. These high charges increase costs for businesses and decrease competitiveness. But the Budget is short of any concrete measures addressing this problem. At this stage, the government Greens say budget lacks focus Alternattiva Demokatika questioned the foundations of Budget 2014, saying it was unclear whether the projections for taxation revenues in 2014 were too optimistic. AD chairperson Arnold Cassola said that since projections in June for VAT and income tax revenues were lower than estimated, it was unclear whether revenues in 2014 would make up for any eventual shortfall. Cigarettes will go up by 30c per packet an alcohol by 40c per litre will be asking the MFSA and the competition authority to examine this situation and see whether there is room for corrective action. The preferred option is to seek consensus between operators. Government is envisaging a charter on the rights of small investors and a charter of rights of bank clients as well as an arbiter for financial services. Small businesses Presently 31,000 family owned business employ 38,400 people. Government will be presenting a new law regulating family businesses with the aim of ensuring the sustainability of these businesses. Another aim of the new law will be to facilitate the transfer of these businesses from one generation to the next to ensure that these businesses are consolidated, not fragmented. Hawkers to be relocated The hawkers market, which employs 74 family businesses, will be moved to Ordinance Street. But while hawkers will benefit from being located in a more strategic location, the government will be insisting on a uniformity of standards. Those not abiding to the new standards will risk losing their licence. Transport and congestion Traffic congestion is described as a problem affecting competitiveness. The short-term measures contemplated in the budget include the prohibition of industrial trucks and horses during peak hours. In the medium term, the government will give priority to the construction of the Kappara fly over. The long-term approach consists of a number of feasibility studies on the feasibility of a bridge or tunnel between Malta and Gozo and a study to explore the possibilities of an underground, monorail and maritime transport. The government is embarking on an "ambitious programme" to improve existing roads. In Mosta the government will focus on the situation at Blata l-Gholja while the construction of a bridge on Triq is-sebh in Qormi will be a priority. The government will also reform the CVA system as from next December, in time to shore up business during the Christmas festivities, by making parking free after 2.00pm and all day on Saturdays. The budget says that the future of public transport depends on the outcome of talks between the government and Arriva, giving no details of the government's Plan B. €3.5 million euro is be- ing devoted to commence the refund of car registration tax, which will take seven years. Details of the scheme will be announced at a later stage. The traffic warden scheme will be reformed. A white paper will be issued before this reform is enacted. The aim of the reform is to give wardens a "more educational aim". Gozo Airstrip The Budget formally resurrects the idea of an airstrip in Gozo, one of the projects discarded by the Alfred Sant government in 1996. The government will commission a socio-economic and a technical study on the feasibility of the airstrip as well as an environmental impact study. The government will decide after a consultation process and assessment of the pros and cons of the development. Environment The government will invest €103.6 million euros in the agricultural and environmental sectors. The government reiterates its commitment to divorce the environmental from the planning arm of MEPA by setting up a separate environmental protection agency. Curiously, in the chapter dedicated to the environment, the budget refers to the new reduced planning fees, which have "encouraged investment by families and businesses". While no reference is made to regulating land use and rampant construction, the government is committed to prioritise air quality through adequate monitoring. The Budget makes specific mention of enhancing urban zones through a €200,000 pilot project on placing pot plants in urban areas. The government also intends to approve noise pollution legislation. The government is allocating €200,000 for the management of the M'Scala family park. The government is also drafting climate change legislation. The government expresses its disappointment on the lack of cleanliness in towns and villages but proposes nothing concrete. No details are given on how the eco contribution tax system will be changed. The government will reduce the registration of certain categories of used cars imported from outside the EU. This will apply to cars which emit less than 150g per kilometre and which have not been on the road for more than eight years. The tax on the registration of motorcycles with an engine capacity of 250cc or more will be decreased by 25%. Previously motorbikes of less than 250cc were exempted from tax. The state will allocate €600,000 for a car scrapping scheme which will encourage people to scrap old cars. Through this scheme car owners will receive between €500 or €900 for each scrapped vehicle. The government will also encourage a shift to auto gas in a separate scheme. Health reforms The government will start paying the expenses of both parents who accompany minors for an operation abroad, instead of paying for one of them as