A so­cial-minded Bud­get, but what about the mid­dle class?

Malta Independent - - NEWS -

The way the Bud­get Speech was writ­ten, and read, makes it ex­tremely dif­fi­cult to as­sess it holis­ti­cally. One has to take a step back and try and get an over­view to try and as­sess what are the Bud­get 2017’s aims and in­ten­tions. This is what we will try to do in this leader.

First of all, one has to look at it in its wider con­text, as part of a five-year process by the party in govern­ment. First came the sta­bil­i­sa­tion of the econ­omy, then fos­ter­ing growth and cre­at­ing new jobs. The time has now come to think of those who are not ben­e­fit­ing from the growing econ­omy.

This is a Bud­get that sets out, as it de­clares, to ad­dress the peo­ple at the lower level of so­ci­ety which had been left out in pre­vi­ous Bud­gets. But in do­ing so it fails to ad­dress the aims and prob­lems of the mid­dle class such as through more tax cuts. And it is the mid­dle class that gets the econ­omy to grow. We note we are not the only ones to be say­ing so.

The Bud­get Speech in de­tail, the num­bers: a year ago, govern­ment had said the tar­get for 2016 was a deficit of 1.1%. Ac­tu­ally, by the end of this year the deficit will be brought down to 0.7% and next year will be as low as 0.5%. There will be no spend­ing spree but only as is af­ford­able by the coun­try. Malta’s pub­lic debt will be 63% this year and tar­geted to be 61.9% next year. Real GDP growth will be 3.5% (nom­i­nal 5.8%).

Taxes: The main change in tax­a­tion re­garded chang­ing what used to be taxed by the eco­con­tri­bu­tion to an ex­cise tax, the rea­son be­ing that the eco-con­tri­bu­tion proved too dif­fi­cult to col­lect whereas the ex­cise duty is eas­ier to col­lect.

Cig­a­rettes will in­crease by 3% and non­al­co­holic drinks have been in­creased by the same amount. The new taxes in­tro­duced by this Bud­get will be min­i­mal but they will be im­por­tant: they in­tro­duce the prin­ci­ple and es­tab­lish the trail, such as a small tax on de­ter­gents and toi­letries and on the black plas­tic rub­bish bags and more im­por­tantly a small tax on ma­te­ri­als used in the con­struc­tion in­dus­try, not just ce­ment and steel rods but also glass and ce­ram­ics (in other words what is be­ing im­ported from Si­cily and pay­ing no tax).

Some tax changes are quite spe­cific: tax on div­i­dends on stocks listed on the Stock Ex­change will be re­funded. For next year only, trans­fer of busi­ness from par­ents to chil­dren will be taxed at 1.55, in­stead of the present 5%. This is to avoid so many le­gal squab­bles and com­pli­ca­tions with the causa mor­tis.

The first time buyer scheme which has proved very suc­cess­ful will be ex­tended for an­other year. In­cen­tives are be­ing brought in to en­cour­age peo­ple to de­velop prop­er­ties in UCAs with govern­ment help be­ing given.

All prop­erty sell­ing in Gozo will be taxed at 2% in­stead of at 5%.

Af­ter the drive to get prom­ises of sale to be reg­is­tered, done by the PN govern­ment, rental prop­erty deals will now have to be reg­is­tered with the govern­ment, al­though not nec­es­sar­ily (so far) to be reg­is­tered at the Pub­lic Reg­istry (in­sin­wati).

The list of Bud­get 2017’s so­cial mea­sures is end­less: the govern­ment has given it­self a three­year dead­line so that all chil­dren un­der 16 will not be al­lowed to fall at risk of poverty. A whole raft of in-work ben­e­fits, many in­tro­duced last year, have been made bet­ter. The Cost of Liv­ing Al­lowance had been es­tab­lished at €1.75 per week. Ac­cord­ing to Min­is­ter Sci­cluna, the RPI es­ti­mate was only fi­nal­ized yes­ter­day morn­ing and it would have given just a €1.16 in­crease per week but govern­ment ac­cepted to go on with the €1.75 it had planned to give and re­coup it when­ever in­fla­tion gives a higher COLA next year.

One im­por­tant sec­tion of the Bud­get Speech re­garded pen­sions. Those with rock-bot­tom pen­sions will get a sup­ple­men­tary help. Pen­sions will not be taxed and those who get pen­sions from else­where will not be taxed on the first €13,000 pen­sion they get (€13,000 be­ing the higher rate of pen­sion in Malta).

There will be a thor­ough change in the means testing with re­gards to the car­ers’ al­lowance (pen­sjoni tal-wens) and other strange con­di­tions, such as the car­ers must not be mar­ried, will be re­moved.

An im­por­tant change re­gards the peo­ple with dis­abil­ity: pre­vi­ously these were all treated on one level but now with re­gards to two dis­abil­i­ties, the low­est on the Barthel clas­si­fi­ca­tion, many of which are bed-rid­den, who will get the min­i­mum wage over a three­year pe­riod.

There has been a dras­tic re­think­ing of govern­ment pol­icy with re­gards to rents of so­cial hous­ing. Af­ter the lib­er­al­iza­tion of rents in 2009, rents of peo­ple in govern­ment hous­ing rose in 2010, 2013 and would have risen this year. Maybe af­ter the com­mit­ment by the Op­po­si­tion to re­tract the lat­est rent in­crease, the govern­ment has now ac­cepted to re­tract rents to the 2009 level.

One de­clared aim of govern­ment is to get a full pic­ture of the rental situation which many times verges on the black econ­omy. The govern­ment thus seeks ways to get peo­ple in rental ac­com­mo­da­tion who get govern­ment as­sis­tance to regis­ter their rents with the govern­ment, the aim be­ing to see if the land­lords are reg­is­ter­ing their rev­enue through rents. There is also a rather ob­scure case of peo­ple who get such as­sis­tance only on pre­sen­ta­tion of a writ­ten af­fi­davit whereas govern­ment would want the situation to be bet­ter reg­u­lar­ized.

Govern­ment has set up a fund cost­ing €8 mil­lion a year over a span of seven years to mop up is­sues re­gard­ing pen­sions of dif­fer­ent cat­e­gories of peo­ple, from Wa­ter & Elec­tric­ity em­ploy­ees, to mem­bers of the var­i­ous Korpi (set up by the 1980s regime), to dock work­ers, and to po­lice claim­ing un­paid over­time pay­ments, etc.

Govern­ment will also set up bonds which may only be bought by pen­sion­ers, giv­ing them a higher yield.

Among the var­i­ous pro­grammes and ini­tia­tives an­nounced, one may men­tion to giv­ing of stipends to stu­dents at the Al­ter­na­tive Learn­ing Pro­gramme, and to those who re­peat cour­ses al­though at a lower level.

It has been es­ti­mated that by the end of this year Malta will have reached 50% of its tar­get for the 2020 al­ter­na­tive en­ergy plan. The so­lar pan­els scheme will thus con­tinue for an­other year and WSC will cre­ate an im­prove­ment at Ta’Barkat and at Bahrija to com­pen­sate for the dis­rup­tion caused by works at these places. The re­fund of VAT paid by car own­ers in 2006 will con­tinue.

As re­gards traf­fic, the Bud­get Speech in­cludes a scheme to pro­mote col­lec­tive bussing by pri­vate in­dus­try and even small SMEs who get to­gether. A pi­lot project at Plan­ning Au­thor­ity in this sense was a suc­cess.

Those who reach 18 years of age next year will get a free bus card for a whole year.

There will be a fast ferry ser­vice be­tween Mgarr Gozo and Val­letta.

Busi­nesses will be en­cour­aged to help their lo­cal coun­cils on com­mu­nity projects and get tax re­bates to do so.

The new Malta Devel­op­ment Bank will start up with an autho­rized share cap­i­tal of €200 mil­lion with its first project be­ing a break­wa­ter for Marsamx­ett.

Malta will get a fi­bre op­tic link to Mar­seille so as to avoid reliance only on the Ital­ian grid.

The former Mtarfa hos­pi­tal will be de­vel­oped into a pri­vate school: a call for ex­pres­sion of in­ter­est will be is­sued soon.

There will be a num­ber of pub­lic con­sul­ta­tions: • To see if par­ents could get sick leave if their chil­dren are sick; • To ex­tend sick leave for can­cer pa­tients; • Re­gard­ing vot­ing at age 16 • Re­gard­ing blood do­na­tion by ho­mo­sex­u­als

Malta will get again a Mother and Child Hos­pi­tal, out­side of Mater Dei and on the lines of what used to be Karen Grech Hos­pi­tal.

There will be a €123 mil­lion fund, funded partly by the ERDF, to pro­mote em­bel­lish­ment and lifts in govern­ment hous­ing blocks.

There will be a new sys­tem of hos­pi­tal car­ers who aim to give par­ents of sick chil­dren some respite say once every six weeks.

In con­clu­sion: One also notes the govern­ment failed to ad­dress the cost of en­ergy with re­gards to which our sis­ter Sun­day pa­per ex­plained how this could be done. On the con­trary, at one of yes­ter­day’s brief­ings, there were some quite wide smiles hint­ing that The In­de­pen­dent got it wrong. One won­ders who got it wrong.

One would have ex­pected more to be said on the macro-eco­nomic level, with prob­lems such as Brexit and the euro fea­tur­ing in it.

The part on traf­fic is very skimpy – once again it fails to ad­dress the struc­tural prob­lems in this re­gard and of­fers only some pal­lia­tives.

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