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Malta Announces Budget Measures

MaltaMedia

22 November 2000

This story is reproduced by kind permission of MaltaMedia at http://www.maltamedia.com


"Today I feel satisfied to announce that the sacrifices that we made during the year were not in vain. Government has worked incessantly to implement the plan drawn up in the budget of last year. In fact, we managed not only to meet our targets but also to exceed them, in both the financial and the economic sectors."

With these words the Minister for Finance John Dalli opened his speech in the House of Representatives on Monday that outlined the government’s Budget for the year 2001. "We are on the right track. We are proposing in this Budget yet another step forward through more discipline in the use of our resources. This will take us further towards our target so that, in the shortest time possible, we will have a financially viable position, a strong economy and a sustainable social system," the Minister said.

The Finance Minister announced that next year’s budget will be based on more enforcement on tax compliance and control on expenditure, without any significant measures to increase revenue. This is a result of the government exceeded its financial targets. The budget deficit for 2000 was Lm95 million (US$209 million) instead of the Lm109 million (US$ 239 million) forecast, and revenue from direct and indirect taxation exceeding the estimates by Lm15 million (US$33 million). Minister Dalli said next year the budget deficit should be brought down to Lm83 (US$ 182 million) and then reduced by Lm 12 million(US$ 26.4 million) each year. The government has set the targets to keep a rate of economic expansion of 7% of the Gross Domestic Product, a 4% unemployment rate, and an inflation rate of 2.5 %.

The much expected decision to increase the price of oil products did not happen, but as from January 2002 the price will fluctuate according to international prices. The government will grant exemptions to EneMalta so that there is no need of changes in the price of petroleum products., despite the fact that the oil bill for Malta was Lm77 million (US$ 170 million) than last year.

These are the highlights of the budgetary measures announced on Monday:

  • Lm1.50 (US$3.3) increase in weekly wage to compensate for the cost of living

  • The cost of cigarettes will increase 5c per packet

  • The reduction of government expenses by Lm5 million (US$ 11 million)

  • Enforcement of legislation on fringe benefits that will effectively tax a number of them

  • A 15% on profits on collective investment schemes tied to the Stock Exchange

  • Benchmarking on income of the self-employed

  • Cars will be taxed according to their price

  • No VAT refunds on health services and educational materials

  • Excise on alcoholic beverages will be set according to the levels of alcohol.

  • This means some beverages such as
    whisky and liqueurs will be cheaper, while brandy and vermouth more dear.

  • Excise on beer will increase and the
    price of beer is expected to rise 1c per bottle.

  • Further liberalisation of exchange controls, especially on transfer of funds in and out of Malta

  • An assistance scheme to parents of children in private schools

  • A revision of pensions as a result of revised salary structures

  • The strengthening of the privatisation process of government-owned companies.

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