COVID-19 recovery plan: reduced fuel prices, €100 vouchers and continuation of wage supplement scheme announced
A reduction in fuel prices, €100 vouchers for everyone over the age of 16, and the continuation of the wage supplement scheme (albeit modified) were all announced by the government yesterday, as part of a COVID-19 economic recovery plan.
Prime Minister Robert Abela, Finance Minister Edward Scicluna and Economy Minister Silvio Schembri yesterday unveiled the multimillion euro plan, which many called a minibudget. Worth a grand total of €900 million, the measures have three main aims: to help businesses now that they have re-opened; to re-incentivize consumption; and to secure Malta’s supply chain and increase its productivity, the three announced.
No less than €400 million - equivalent to 3% of Malta’s GDP - will be spent across a number of years to strengthen the country’s productivity.
The first coronavirus case in Malta was registered in March and a number of restrictive measures were introduced, including the closing down of the airport for commercial flights, restrictions on the number of people able to meet in groups, and the closing down of several types of businesses including nonessential shops. During this period, a number of measures were put in place to help struggling businesses survive. However now, as the number of active cases in the country reduces, more and more restrictive measures are being lifted to the point that restaurants are open again and a date has been set for the re-opening of the airport with flights to select countries. The economy, however, cannot recover overnight.
Addressing the press, Prime Minister Abela said that three months ago the world was hit by an unprecedented situation. “Everything we had worked for over the years was in
jeopardy. The predictions were shocking - both the figures about deaths and unemployment. But we did not let ourselves be controlled by these predictions. We had to work hard to arrive at where we are now, to ensure that these predictions would not come true.”
“We had to introduce measures to protect our people, but which affected our quality of life. All measures were proportionate. Had we not taken these measures, we would not be here today. Had we decided to go for a full lockdown, we would today have a stagnated economy.”
Abela said that the priorities were to safeguard public health and jobs. A number of measures were introduced to sustain jobs. “We wanted to ensure that the country would be up and running as soon as the pandemic subsided. That moment is now.”
Wage supplement
The wage supplement scheme - the government’s biggest source of financial aid for those affected by the pandemic - will continue to at least September, although some industries will see the amount of money they receive per month per employee reduced.
Under the current system, businesses were separated across two annexes - with the hardest hit being categorized under Annex A and receiving €800 per month per employee, and the lesser hit being categorized under Annex B and receiving €160 per month per employee. That system will run until the end of this month.
From then, the wage supplement scheme will be split across three strands. Hotels, the entertainment industry, travel agencies, language schools, and airlines will continue to receive the €800 per month per employee as before, but the majority of the remaining businesses categorized under Annex A will see the supplement reduced to €600 per month per employee.
Other businesses which are now open and receiving clients but were on Annex A owing to the fact that they had closed down, will be categorized under Annex B, meaning that they will receive €160 per month per employee.
Under this arrangement, the wage supplement will be extended to the end of September.
There were two anomalies to the scheme before: pensioners who had an alternate means of income and students who have a stipend were excluded from the wage supplement scheme. They will now also be entitled to it.
Two further measures were revealed for which all businesses categorized in one of the Annexes - irrespective under which Annex they fall - can take advantage of.
Electricity bills and rent
The first is a one-time cash subsidy of the electricity bill which the businesses will receive over the course of July, August, and September. The subsidy will be of either 50% of the bill, or up to a maximum of €1,500.
The second is a similar one-time cash subsidy on rent. Businesses can apply for up to €2,500 in a cash subsidy to help in covering rent costs for the months of July, August, and September. In all, these two subsidies together are expected to cost the government €80 million.
Everyone over 16 to receive €100 in vouchers
Everyone over the age of 16 will receive €100 in vouchers as the government looks to revive public spending and consumption.
The vouchers, which will be separated in five vouchers of €20 each, will arrive at recipients by post.
People will be able to use €80 out of the €100 at outlets such as restaurants and bars, while the remaining €20 can be redeemed at retail outlets which recently reopened.
The Nationalist Party had suggested a similar measure last April. They had called for the government to issue a €50 voucher which could be redeemed in restaurants and bars as the economy restarts once again.
Fuel prices down by 7 cents from next Monday
The price of fuel will decrease by 7 cents as from next week, it was said.
This means that the price of petrol will decrease from €1.41 per litre to €1.34 per litre, while the price of diesel will decrease from €1.28 per litre to €1.21 per litre.
The price change will apply from Monday 15 June onwards.
The price change is the first revision since August 2019, when prices increased by 5 cents.
The reduction of fuel prices was one of the measures which several stakeholders, including the opposition, had called for during the pandemic, especially as oil prices plummeted across the world.
Property market
The property market will see significant attention as well, with the stamp duty for both the property buyer and seller being reduced. The stamp duty for the buyer will go from 5% to 1.5% while the stamp duty for the seller will go from 8% to 5%.
The deduction will be made on all property purchases below €400,000.
This will be applicable for all contracts signed up until March 2021, and will also apply to those buying property under the firsttime buyer scheme.
Meanwhile, the first-time buyer scheme itself will be expanded in such a manner that those who bought property before the scheme was introduced in 2013 and were hence not eligible, will now be eligible for the scheme.
The first-time buyer scheme means that the first €175,000 of the purchase is tax-free.
In terms of measures directly affecting businesses, the tax deferrals announced last March will continue until the end of August. These deferrals have to be paid back by May 2021, with no interest fees.
Tax refunds
For the third consecutive year, full-time and part-time workers will be receiving their tax refund cheques. 210,000 workers will benefit from this refund, which will cost the state coffers €11.5 million. A family with two working parents will be receiving an average of €328 between the refund and the voucher.
In more of a social measure, the in-work benefit will see both its threshold and rate increase. A special supplement of €250 per family will also be given to those eligible at a cost of €4 million.
Meanwhile, a measure for those who should have been tying the knot in the past few months but had to cancel their weddings due to the outbreak of the pandemic was also revealed. Under this measure, couples will be eligible to receive €2,000 from the government in order to help them cover expenses which they had already paid. This scheme has a maximum take-up of €2 million.
A separate fund of €3 million will be opened for Voluntary Organisations in particular those whose income has dried up as a result of the pandemic, while another €2 million will be allocated
to helping homes for the elderly, whose wage bill exploded due to the fact that they went into a lockdown with their staff living inside the homes for the benefit of their patients.
Economic level measures
Several measures on a more economic level have been announced as well.
Firstly, it was assured that the Malta Development Bank will step in to under-write any bonds which are not sold when these mature.
Tax credits received as part of the Malta Enterprise micro-invest scheme can also be transferred into cash grants. Up to 30% of these credits can be changed into a cash grant which run to a maximum of €2,000 or €2,500 if the business is based in Gozo.
Licence fees, such as MTA and Commerce Department licenses, meanwhile will also be waived with businesses saving a cumulative total of €5 million as a result of this measure.
Malta Enterprise will also be running a scheme to help companies re-engineer and restructure their business models, with €5,000 per business being reserved for consultancy services in this regard.
The Skills Development Scheme will also see an increase of €5 million in its budget. All in all, the three aforementioned measures are expected to cost in the region of €12.5 million.
Trade Malta will also have a €400,000 budget to refund expenses of up to €10,000 which companies undertook to promote their product or service digitally abroad.
Those people or businesses who were going to attend an international trade fair which was cancelled because of COVID-19 will receive an 80% refund.
Meanwhile, the government will be refunding 33% of the port charges for ships which import goods to Malta but are not in trans-shipment, and will be refunding 10% of the same charges for those which export goods from Malta but are not in trans-shipment.
Malta Enterprise, through the Malta Development Bank, will also be allocating €10 million to make good for guarantees on exports, while €4 million will also be reserved for the construction industry so that contractors can modernize their machinery. They can receive up to €200,000 each.
A fund of €5 million will be allocated to local businesses for them to advertise their local products while it was announced that the government will be announcing its Low Carbon Development Strategy next October.