Issue link: https://maltatoday.uberflip.com/i/739617
16 A budget for all Budget 2017 maltatoday, TUESDAY, 18 OCTOBER 2016 Stephen Muscat J ust getting an upgrade in credit rating from Standard and Poors, was all that the government wished for, to give it the push to confirm that the economy is booming. Now the minister of finance has said that poverty is a reality and not a perception. And so, with the economy doing well, the government took on board proposals by various social partners and introduced incentives proposed by them. But let us first look at the basics. Having the gross domestic product expanding at double the rate of the EU and Eurozone, having 96% of the new jobs coming from the private sector, and sustaining low inf lation, it is time to be generous. Yet the government ensured it will continue to sustain the reduction in public debt as a percentage of the gross domestic product. Even government finances next year will only have a deficit of half a percent, nearly a break-even situation. The government projects that next year the economy will continue to grow. Though more exports will be registered next year, the government is claiming that importation will increase and the inflation rate will continue to remain subdued. The finance minister started his Budget speech by revealing a series of measures to specific sectors, not just of the economy but of the population. The fundamental goal appears to be a major initiative to leave more money in the pockets of the citizen. Pensioners will continue to get an increase in their pension, and not just because they are awarded the full COLA as workers are, but additionally pensioners are getting a tax-free pension. As the number of persons reaching retiring age continues to increase, one wonders if this is sustainable. The government believes so, because it knows that not all monies given to pensioners are spent. Next year will also see the setting-up of a savings bank, giving higher interest rate than that earned by market interest rate for bonds. Moreover, after sustained complaints, all those earning dividends from shares held in companies listed in Malta Stock Exchange, will be able to get a tax rebate if their personal tax rate does not reach 35%. There are more extensions and increases in supplementary allowance. This is to target low- income families and those on minimum wage as the commitment is to get more people to work. This will result in the lowest rate for persons registering for work, ever. Having 27,000 persons benefitting from upping the supplementary allowance, and another 22,000 pensioners who will benefit with an increase, with this step the government has targeted nearly 12% of the total population. There are other strata in society that will be targeted. From all employees getting a €1.75 weekly wage increase, service pensioners who will continue to benefit from an increase in amount deductible together with further bonuses to female pensioners' bonus who did not pay enough national insurance contributions. These were some of the consequences that one can safely say will leave money in the pocket. But then there are a number of measures, including the removal of eco-tax and replacing it with excise duties. One has to see if from these measures, detergents and toiletries will increase in price. And to incentivize business, the government has introduced measures for generational transfer of businesses by reducing the stamp duty, and also offering farmers to transfer government- owned agricultural land between parents to children. Another series of incentives are aimed for Gozo, where the government will offer a reduced stamp duty rate for those buying property to take up residence in the sister island. This together with a proposal of €16 million in investment at the Xewkija industrial estate plus a second fiber optic link, and a fast ferry service to Gozo, the idea is that Gozo is a destination of choice. Perhaps in anticipation to justify the cost of a permanent link? The government has an ambitious capital projects plan, which includes three new primary schools, upgrades in existing schools and further investment in the infrastructure at the University of Malta. There are also projects of government-controlled entities like Water Services, and Enemalta and the Institute of tourism studies will kick off as a new campus at Smart city. The government is embracing the increase in tourism figures from Cruise liners. In fact there is a plan to extend the Pinto Wharf as a second berth for 300 metre plus cruise liners. Stating that in next few years, 40 cruise liners are coming into service, the government wants to make sure Malta's facilities remain attractive. There are other capital projects to make Malta greener, and at the same time incentivizing development of car parks, a new yacht marina, and a swimming pool in Gozo, Marsascala and another Cottonera sports complex. There are even projects to regenerate Urban conservation areas and new housing projects. The budget seems to be threading a fine line in not adding costs onto the private sector, but more than anything offering them tax credits to introduce voluntary private pension schemes, tax credits on research initiatives, and abolishing trading licenses. Having 30,000 businesses benefitting, is no joke. Personally, I liked the incentive whereby the government gives a birthday present to each 18 year old in getting a free public transport voucher for one year. It reminds me of the free travel given to kartanzjan travel on Gozo Channel. One cannot just conclude that every 18-year-old is a student or able to afford buying a car. So this generation will hopefully get a pleasant experience in travelling by public transport. On the other hand, this may be an indirect subsidy to the private public transport operator. On the other hand, there are so many public private partnership proposals, that it is this government's belief that to get the private sector going, there is a price to pay or give away. This government was innovative in introducing solar bonds and encouraging firms to list on the Malta stock exchange with tax benefit. And for members of the MHRA, who have been requesting a further reduction in electricity bills, the government is ready to offer them benefits from savings in energy consumption. There are so many incentives and initiatives, that are not mentioned here. But overall, there seems to be no sector in the Maltese society that will state, it feels left out, other than the self-employed. Nothing it appears seems to have been offered to them. The fundamental goal appears to be a major initiative to leave more money in the pockets of the citizen As the number of persons reaching retiring age continues to increase, one wonders if this is sustainable