Issue link: https://maltatoday.uberflip.com/i/417582
8 Budget 2015 maltatoday, TUESDAY, 18 NOVEMBER 2014 REACTIONS TO BUDGET Chamber welcomes 'public private collaboration' in Budget THE Malta Chamber of Com- merce, Enterprise and Industry said two underlying priorities of the 2015 Budget Speech, fiscal consolidation and a reduction in welfare dependency, are similar to its priorities for the 2015 Budget, and that it had "forcefully" recom- mended the fair and efficient en- forcement of taxes and addressing abuse in social benefits schemes. The Chamber said the Budget was a continuation from last year's, saying the government was ac- knowledging the important role of the private sector in the economy. "The Chamber welcomes the ef- forts being made in order to ra- tionalise the tax collection system whilst at the same time introduc- ing incentives for individuals and companies. Measures aimed at en- couraging or requiring individuals (irrespective of their social status) to train themselves and accept jobs that offer fair financial reward should be considered positively. "Such measures are conducive to a change in culture to seek pro- ductive work rather than rely on social benefits. At the same time, the planned consultation process on school hours is welcome both in terms of providing support to working parents and in enhancing the overall schooling experience." In addition to the above meas- ures, the Chamber said the Budget was primarily an exercise in fi- nancial data but there were other important measures which will require tough political decisions and public-service preparedness to implement. "The data for the Maltese econo- my are in general encouraging, es- pecially following the introduction of ESA 2010 yet the government has to ensure that there are no slip- pages in at least three areas: name- ly, public Finances including funds allocated for sectoral restructur- ing and the formation of new ini- tiatives, the proposed revision and implementation of labour market policies and practices, and the suc- cessful setting up of partnerships with the private sector." The Chamber said that close at- tention had to be paid to the imple- mentation of the restructuring of the energy sector, health, transport and Air Malta. "Of equal importance is the suc- cessful implementation of the inte- grated revenue collection system which could enhance revenue for government and possibly render attainable the further reduction of certain tax measures, for example income tax rates for different in- come brackets. "Experience tends to show that the government has not always been successful in ensuring a level playing field in the implementation of various tax regimes like VAT, eco tax and excise duties. The Mal- ta Chamber welcomes the setting up of a specialised enforcement and market surveillance unit." The Chamber also welcomed the announced revision in labour mar- ket legislation in line with more ef- ficient EU practices. "The Chamber reiterates its stand in favour of revising the basic and outdated formula of the Cost of Living Adjustment (COLA) mech- anism and pledges its willingness to continue to discuss the mat- ter with its fellow social partners. Amending the formula to include measures for both inf lation and productivity is in the interest of employers and employees alike as this will result in a smoothening of the annual amounts of COLA avoiding high unaffordable com- pensation in times of high inf la- tion and low amounts when the increases in the Retail Price Index (RPI) are low." The Chamber welcomed the an- nounced measures in relation to maternity leave, the introduction of third pillar pensions and the se- ries of measures to attract the in- active and unemployed cohorts of our society to the labour market. The Chamber also welcomed the unprecedented number of Pub- lic Private Partnership (PPP) ini- tiatives outlined in the Budget for several key sectors not least for ex- ternal trade promotion with the es- tablishment of Trade Malta Ltd – a measure which the Chamber itself proposed in its Economic Vision 2014-2020. "The Chamber has always been consistent in its statements that the Private and Public sectors have two distinct but complementary roles in the economy." Employers concerned over disability quota THE Malta Employers' Association said that the government should have consulted with employers be- fore deciding to enforce a law that 2% of the workforce of companies employing over 20 people must be made up of people with a disability. "We have always expressed our- selves in favour of integrating disa- bled persons, however there are ques- tions that need to be answered," the MEA said in a post-budget reaction. "How can companies employing 20 persons have 2% of their workforce classified as disabled persons? What about unregistered disabled per- sons? What about partially disabled persons – are they also to be consid- ered for the quota purposes?" By 2017, companies who don't ful- fill the disability quota will have to pay an annual €2,400 fee for every disabled person they should be em- ploying, capped at €10,000. In 2015, such employers will have to pay a third of this fee and in 2016, they will have to pay half of it. Funds gen- erated through this initiative will go to the National Fund for Integration of People with a Disability. The MEA also said it "doesn't un- derstand the rationale" behind the taxation of wine, given that it is a product in which local industry has invested heavily, and which faces strong competition and disadvan- tages due to diseconomies of scale. While the MEA also welcomed the cuts in energy rates for industry, they said that it is important to posi- tion the energy rates at a level that makes local business competitive, given the global scenario of plum- meting oil prices. "Thus it is not the rates per se that are important but the rates relative to what competing companies are paying in other countries," the MEA said. "We need to ask whether the new rates bring commercial energy tariffs close to the EU average. "Another consideration with re- spect to energy rates is their fiscal sustainability, given that as yet, the reductions are not resulting from cheaper generation of energy, but through subsidies and, this far, in the absence of clear time-lines for the operation of the new power sta- tion." The MEA said that the impact of the budget on consumer expenditure will depend on the effect of the €0.58 Cost of Living Allowance increase on one hand and the substantial in- come tax reductions on the other. "The rise in social housing rents, coupled with anticipated increases in prices of other services may neg- atively affect that segment of low income earners not covered by col- lective agreements or other wage adjustments," the MEA added. "The decrease in income taxes will raise the purchasing power of middle in- come earners who will end up with lower deductions for the upper mar- ginal income, overtime and taxable allowances." The MEA said it agreed with the government's decisions to remove eco-tax on electronic equipment by September 2015, to incentivise third-pillar pensions in preference to a mandatory second pillar, to is- sue a fresh call for Training Aid Framework funds, and to provide a one-time bonus to people in receipt of social security benefits, low in- come earners and income tax payers working full-time who are not ben- efitting from the 2015 income tax reductions. They also described the idea of 'Project Malta' to promote public-private partnerships as "en- couraging" While the MEA believes that the announced in-work benefit will in- centivise workforce participation, they are concerned that it could disincentivise some employees from working overtime so as not to lose the benefit. "We appreciate incentives to em- ployers to hire single parents, and other initiatives to make work pay, but we still maintain that the benefit tapering system can create issues at the workplace," the MEA said. "We remain, in principle against the con- cept of treating social benefits as an opportunity cost to gainful employ- ment." They also said that the compul- sory Youth Guarantee programme for young, unemployed and single mothers could renounce their de- pendency on social benefit, and praised the measure to link benefits with the youth guarantee as a "bold step" to channel recipients of social benefits into vocational training and productive employment. They also said that they are disap- pointed that their proposal to estab- lish a system of set-offs between gov- ernment departments for amounts due by government to relieve com- panies of liquidity problems wasn't taken up in the budget. Chamber president David Curmi and director Kevin J. Borg MEA director Joe Farrugia