Sound basis for tax relief - PM

The budget has provided a sound financial basis for better things to come, according to Prime Minister Lawrence Gonzi.

As the deficit "sound barrier" would be broken next year, the government could start ploughing back the benefits through tax relief measures, Dr Gonzi told a news conference shortly after his marathon budget speech.

The budget, he said, had unveiled encouraging financial results coupled with good economic growth - despite the huge challenges posed by the price of oil and globalisation.

"We have nothing to fear but only opportunities to grasp," Dr Gonzi said, flanked by fellow MPs.

He said the budget presented absolutely no tax increases. On the contrary it provided a number of incentives such as the revision in the capital gains tax.

Asked whether he believed the 50c a week allowance given to make up for the electricity surcharge was enough, Dr Gonzi said it was the best possible solution in the circumstances.

He promised that Enemalta Corporation's restructuring would forge ahead to weed out inefficiencies, confirming that a reduction in the workforce was not excluded should this be required.

The Prime Minister disagreed with claims that employers would crumble under the fuel burden. Contrary to other countries, the government had introduced a capping system on industry not to undermine the country's competitiveness.

Dr Gonzi said his government would stick to the pre-budget document promise to embark on a study to reform the income tax system, starting from January.

He lambasted Labour leader Alfred Sant's reaction to the budget, saying he was scandalised by the way the opposition leader persisted in twisting facts.

"Economic growth generates more taxation revenue so why does Dr Sant insist on saying that we are introducing new taxes when this is not the case," Dr Gonzi charged.

Suffice it to say that income tax revenue this year increased without any increases in tax rates.

He described Dr Sant as a leader with no vision, lacking the courage to offer alternatives or even to applaud any good initiatives.

"Why was it only the Labour Party that decided to boycott the pre-budget document and the pensions debate? The biggest problem of the country is not the deficit but the opposition," he said.