BUDGET 2008 | Tuesday, 16 October 2007

Business Today asked two former finance Ministers and two technocrats for their views on the budget, the LM 1.50 cost of living increase and the government’s optimistic target of increasing it’s revenue by LM 58 million in the next year.

Prof Edward Scicluna, economist:
“If one were to try to find any thorns among this budget’s roses, one would surely fail. I appreciate the constructive effort to strengthen social schemes. Yet overall one has to ask, are all these schemes sustainable? I have a gut feeling that the government is being very optimistic on it’s revenue projections which make it possible for the government to reduce the deficit while increasing it’s expenditure. The budget also lacks measures to increase competitiveness. Surely the cost of living increase of Lm 1.50 c will not help to increase competitiveness.”

Alfred Mallia Milanes, industrial relations consultant:
“This budget continues an exercise stated a number of years ago and is part of the vision for 2015. It is also evident that funds from the European Union are the backbone of the government’s projects. The investment in education is a positive aspect but I have serious reservations of the Lm 1.50 COLA increase. By giving such an increase the government is undermining confidence in the COLA mechanism. Overall with all the across the board increases, I see a risk of the economy over heating. I think that the government’s revenue projections generated by economic growth are realistic.”

Former Finance Minister Lino Spiteri:
“The Prime Minister’s delivery was good although his script was a bit disjointed and lacked a flow when moving from one subject to the other. I still firmly think that the Lm 1.50 COLA increase is a big mistake. It puts the burden on employers and will fuel inflation. I am not saying that a 50 cents increase would have been enough for cost of living increases. But it is evident from the budget itself that the government had money to spare and could have reached the same goal through the reform in income tax bands. As regards lower income earners who do not pay any taxes, the government could have compensated these workers by the same amount through negative tax cuts. The children allowance increase was a very positive measure from the social angle.”

Former Finance Minister John Dalli
“This budget boosts the financial situation of Maltese families through the reduction in income tax, the adjustment of children allowances and assistance for those sending children to private schools. It improves the purchasing power of Maltese families. As regards the COLA increase of LM 1.50, one has to understand that every rule must be adapted to the circumstances. It would have been irresponsible had the government ignored the foreseen explosion in food prices. As regards the increase the projected increase in revenue one has to keep in mind that the government is enlarging the economic base of the country. The increase in property sales and profits made by the financial sector all lead to an increase in tax revenue. If one looks at what happened this year one notes that this revenue increased substantially. The government is basing it’s projections on statistics.”