Issue link: https://maltatoday.uberflip.com/i/585015
14 Budget 2016 maltatoday, TUESDAY, 13 OCTOBER 2015 REACTIONS Chamber of Commerce: Budget acknowledges private sector's role THE Chamber of Commerce said it noted the underlying priorities of the 2016 Budget Speech, name- ly fiscal consolidation, strong economic growth and better liv- ing standards for all. It however noted a decline in capital expenditure for 2016 and that demands for energy tariff re- duction were not taken up to the detriment of Malta's general com- petitiveness position. "All in all, however, this Budget continues to acknowledge the pri- vate sector's important role in the economy. On its part, the Malta Chamber is committed to work towards supporting the growth of business, employment and pros- perit y in Malta. "This year's budget continues to build on last year's endeavours in a number of other areas including income support for low and mid- dle-income earners and pension- ers, further investment in human resources, environmental initia- tives and the real estate sector," the Chamber said. It said data for the Maltese econ- omy was encouraging, but the country must not allow for any complacency and must at all costs ensure that there are no slippages in at least three areas: namely, public finances, revision of labour market policies, and PPPs. The Chamber welcomed govern- ment's commitment to address the country's ease of doing business rankings, updating bankruptcy legislation, streamlining tender- ing procedures, and reducing the performance guarantees from 10 per cent to 4 per cent. The Chamber said it fully sup- ported the shifting of a number of products falling under this Eco-Contribution Act to the ex- cise dut y regime, but it said it was surprised that little or no consul- tation took place on this measure ahead of the Budget. "This, par- ticularly in the light that this shift will surely affect the business operations of law abiding compa- nies in the immediate term at a sensitive period of the year," the Chamber said. The Chamber was disappointed to note that that there were no measures to address the further lowering of energy tariffs for busi- ness, which was the Chamber's prime recommendation prior to this year's Budget. "It is feared that this fact may support the further gradual ero- sion of Malta's competitive posi- tion in cost-sensitive sectors rela- tive to other regions and states. "In terms of competitiveness, the Chamber is also disappointed to note that little or no mention was made to the proposals made by the Chamber in the field of Re- search, Technology, Development and Innovation (RTDI)." Employers Association praises 'balanced' Budget THE Malta Employers Association (MEA) has praised the budgetary measures implemented for Budget 2016, describing it as "a ref lection of positive developments in the Maltese economy". The economy is out of the ex- cessive deficit procedure and is projecting a deficit of 1.1% of GDP for 2016, with expected real GDP growth to reach 3.6%, the associa- tion said in a statement released soon after the Budget speech by Finance Minister Edward Sci- cluna. "The main structural issues in the labour market are a mismatch of skills, and the need to encour- age a higher labour participation rate through a sustained rate of female participation and also of retired persons," the statement added. The Association agrees with the incentives for employees opting to continue working beyond retire- ment age to enhance their pen- sions, as long as it is still at the employers' discretion to decide whether to retain such employees after they reach retirement age. The MEA said that the fact that over the past years, the Maltese economy was sufficiently resil- ient to weather the international recession better than many other developed economies, together with a strategy for growth friendly consolidation in recent years, has resulted in a situation whereby government can introduce ex- pansionary measures such as tax reductions without jeopardising fiscal targets. This may well result in a balanced budget in the com- ing years, and a reduction in the public debt. MEA said that the measure to make contracts of employment templates on line has to be stud- ied and evaluated. It added that the current labour legislation already has the necessary safe- guards to ensure that employees are given a contract of employ- ment, which is normally drafted by the employer. The Association supports the many schemes administered by the Jobs Plus (previously ETC) as a means to encourage labour mo- bilit y. On transport, the Associa- tion said that although the budget speech points towards a number of medium term measures to ad- dress the problems that many are facing, the immediate situation is still not being addressed. The Association also called for a more open and transparent discussion about fuel and energy prices so that the social partners can be informed and involved in decisions related to the price of fuel and energy which is a major determinant of many companies' competitive edge, particularly in export markets. It acknowledged that pricing decisions need to fac- tor in investment in alternative energy and measures to stabilise prices in the face of a volatile mar- ket. The Association said that one of the challenges facing Malta is to deal with the pressures of rapid growth, such as labour shortages, environmental constraints, and a stress on the general infrastruc- ture. It added that incentives for SMEs should be more defined and accessible, and that the public sec- tor needs to be more efficient and streamlined to assist the private sector in continuing to generate economic expansion. MHRA wants talks on collection of €5 eco-tax DESPITE its initial misgivings, the Malta Hotels and Restaurants As- sociation (MHRA) refrained from criticising the €5 eco-tax imposed on tourists and said it should not adversely impact tourists' numbers to Malta "if managed well." MHRA stressed that the method of collection should be further dis- cussed to ensure fair distribution and avoid abuse. In its initial reac- tion MHRA, welcomed the Budget which it said will "take the econo- my to the next level." MHRA commended govern- ment for its continued efforts to consolidate its fiscal position and the reduction in the fiscal deficit from 2.1% of GDP in 2014 to 1.1% in 2016. The association underlined the Budget's financial prudence which it said would contribute to strength- ening the macro- economic funda- mentals of the economy and "ensure sustainability of economic gains in the long term." "MHRA is encouraged to note that the Budget unveiled today, rec- ognises both short-term and long- term economic needs by signifi- cantly setting the right foundations for a sustainable tourism model," the association said. Noting that over the past years the tourism sector has been a ma- jor contributor to economic growth MHRA called upon the authorities not to take this important sector for granted. It said measures announced in re- lation to incentivising investment in energy efficiency by the hospital- ity sector were a "step in the right direction." "After the reduction of 25% in en- ergy utility bills benefited by our members earlier this year, the effi- ciency incentives announced in the Budget today will further support the hospitality sector to become autonomous in managing such an important cost in the operation," MHRA said. MHRA also welcomed the invest- ment in a new Institute of Tourism Studies "as human resources are key to the tourism sector." It also noted that the additional €1 million allocated to the MTA need to be spent on efforts to tap new markets and extend the sea- sonality spread. MHRA recognised efforts to encourage the private sector's in- volvement in the management, maintenance and upgrading of tourism zone areas through a PPP model and a restructured Tourism Zone Development Foundation. In addition the MHRA reiterated its position and called upon gov- ernment to eradicate the practice of unlicensed accommodation which is unfairly competing with legiti- mate businesses and contributing to significant losses in Government revenues. "MHRA is also pleased that gov- ernment has recognised its' efforts to promote Malta as a leader in the Mediterranean region through the Mediterranean Tourism Founda- tion in spearheading tourism as a vehicle for peace and stability in the region. It welcomes its govern- ment's support and contribution to this important initiative which will would bare fruit in the medium to long term." Developers welcome 'positive' Budget THE Malta Developers Association described the 2016 Budget as "very positive" and said it will continue to strengthen the property market. "The Budget shows that the gov- ernment is looking at Malta's eco- nomic future in a manner that is outside the limits that governments normally work, that is, outside the box," the developers said. The influential lobby also ex- pressed its satisfaction that gov- ernment accepted a number of its suggestions, including the propos- als for fiscal measures to help fos- ter the regeneration of our Urban Conservation Areas, and the in- troduction of a final withholding tax on income from commercial leases. The MDA also welcomed the ex- emption on the payment of stamp duty on the purchase of property by first time buyers which the MDA had requested in previous years, is going to be extended for another year. Anton Borg