'No negative fiscal measures'

It might be some seven months before it is presented to Parliament, but Parliamentary Secretary Tonio Fenech already believes the upcoming budget will not spring any nasty surprises.

Speaking to The Times, Mr Fenech ruled out any "massive" tax reforms, amid claims that it will not be a so-called election budget.

"We are meeting our revenue targets... we're possibly exceeding our own expectations. The indication is clearly that the upcoming budget will not take negative fiscal measures," Mr Fenech said.

The government has already started focusing on the pre-budget document, which this year is expected to be released as early as June. The wide-ranging document has served to ease the usual anxiety in the run-up to the budget speech in Parliament. Mr Fenech explained that the government will be launching the document earlier in the year because summer is not the ideal time for discussion and especially since the budget is now being announced by October.

"At the moment we're carrying out a series of evaluations. We are looking at areas we wish to focus on in the coming budget to incentivise the economy and to meet our social responsibilities." He is clearly keeping his options open and is evidently aware that any generous handouts could easily be interpreted as an electoral ploy.

"Yes, it will be the last budget before the general election but we don't do the so-called election budgets. People should judge its implications after we announce the budget," Mr Fenech said.

It was still early to look at any specific proposals, including another possible shake-up in income tax. The government was prepared to take everything into consideration, although it has no intention of setting up another tax reform commission for fresh proposals.

The government has no regrets over the measures it took in the last budget, Mr Fenech added. The revisions in income tax bands had not dealt a blow to the country's coffers other than what had been anticipated. On the contrary, the revision helped a brisker economy to generate more money.

"Clearly we are on the upturn. The economy and the revenues are performing well. However, we need to continue strengthening the economy. The government has two objectives: It needs to be wise enough to continue investing in the economy while assisting the general spending power.

"The budget has to remain sustainable, especially in view of the anticipated introduction of the euro, which demands fiscal discipline. We will never draw up irresponsible plans."