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Maltese Chamber Of Commerce Gives Verdict On 2002 Budget

by Lorys Charalambous,, Cyprus

19 December 2001

Earlier this week, the Maltese Chamber of Commerce released its reponse to Finance Minister John Dalli's 2002 budget, in which it stated that although the general direction of the budget was satisfactory and understandable given the current economic climate, too little had been done in terms of corporate and individual income tax.

Amongst other things, the Chamber called for greater transparency in the way in which the Finance Ministry records transactions, the simplification of statutory requirements and fiscal incentives for small enterprises and contractors, reforms to the financing of the welfare and health sectors, the reorganisation of bodies entrusted with attracting investment in the country, and greater private sector involvement in state-run enterprises.

However, the Chamber of Commerce's main concern was the adjustments made to the personal income tax rates for married couples, which it felt did not go nearly far enough. In his 2002 budget, John Dalli raised the non-taxable income limit by Lm100 to Lm4,100, increased the first tax bracket of 15% to Lm1,800, and raised the second tax bracket of 25% by Lm500 to Lm2,500.

Although the COC recognised that the country's budget deficit problem was paramount in the Finance Minister's mind, and that the budget was primarily intended to stimulate economic growth, it said that it: 'would have preferred to see a more radical change with a reduction both in terms of personal and corporate taxation.'

It explained that: 'a lowering of personal and corporate tax rates would serve to substantially increase revenue from income tax particularly through the inclusion of underground economic operators into the fiscal system.'

The leader of the opposition Alternattiva Demokratika party, Dr Harry Vassallo, was somewhat less diplomatic in his criticisms of the budget. Speaking in late November, he called Mr Dalli's offering: 'a bland budget of mixed messages', and condemned the savings netted as a result of the rate adjustment for married couples as 'insignificant'.

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