The middle class pays for it once again – Vince Farrugia
Matthew Vella
GRTU director-general Vince Farrugia yesterday warned that hard times lay ahead for the Maltese economy, and that Budget 2009 was balanced but did not leave much elbow room for businesses.
“Tonio Fenech could have been bolder. But that he wasn’t shows on fundamental thing: that the State’s finances were not as good we were made out to believe,” Farrugia said in his initial reaction yesterday.
Farrugia said consumers and businesses needed “a pocketful” that would help them face the impending economic situation. “But the country has yet to learn that deficit financing must be solved, because it’s good not to overspend and be ready for the bad times ahead. Once again, the middle class is financing it again. The bottom line is that it will be the worst off.
“It is clear government expenditure overshot all targets, which puts the minister in a situation where he has to make increases on revenues to meet the necessarily obligations, both internally and externally given the adverse conditions we are facing internationally.”
Farrugia reserved kind words for Fenech’s announcements on expenditure in tourism and industry. “He increased incentives for host families, low cost airlines, and product development. He did the same for industry in terms of research and innovation.”
But Farrugia said Fenech might be banking on an economic growth that may not be as evident. “The fact that there is an increase of €60 million in income tax revenues and €23 million in VAT, presupposes a growth which I don’t really see.”
The GRTU director also commented on the slew of eco-contributions and customs excise increases that will affect business.
“Fenech was supposed to loosen the eco-taxation because of private schemes such as those on waste management. We were supposed to get an exemption on eco-taxation for those businesses that are already paying for such schemes. The same goes for motor vehicle licences. For months he said he would be losing some €10 million on it, but now he is projecting a €7.8 million increase.
“The increasing cost of food is also due to expenses for transporters. So rather than trying to relieve transporters, Fenech is projecting an increase in petrol and diesel duties revenue by €9.4 million, which I think is unique – I don’t think anybody else in Europe has increase the cost of duty on fuels at this time, when diesel itself is going up. It is illogical. We should be reducing costs instead.”
Farrguia described the budget as a good accounting exercise that tried to balance the books with a socially friendly slant, especially for lower-income groups. “Within the limits of the country’s finances Fenech has spread his wings quite sufficiently.”
But the effect would not be strong enough to sustain business for the storm that is gathering, Farrugia said: “That’s what coming our way… when you see how public debt has shot, you realise the big problems in the management of our finances. Now the government is literally looking inside the cupboard to see what it can find.”
