Should one read much, or anything at all, in the fact that the Budget for 2008 will be presented towards the middle of October? The parliamentary Secretary at the Ministry of Finance confirmed that last week, almost in an aside, which suggested that this was no new or big deal. New it certainly was not. A pattern is developing with the financial estimates being put before the House of Representatives earlier than usual in November. If pressed, the Finance Minister and the Parliamentary Secretary would probably point to that pattern.

Whatever they might suggest, this year there is room for a different interpretation. The Prime Minister, who still doubles up as Finance Minister, will want to retain the option of calling a general election before the year is out. An option, no more, for - to my mind, at least - those who are touting a November election are way off the mark.

The government has almost a year to go. Prime Minister Lawrence Gonzi will want as much judicious time as he can calculate to try to switch public opinion in his favour. At present all the public and supposedly confidential polls are pointing to a strong MLP lead. However they also point to a chunk of the electorate claiming to be undecided.

That chunk will not translate into as many abstentions. It includes Nationalists who, disgruntled or not, will eventually trudge back to the fold. It also includes a substantial element of people who are truly undecided - whether to vote or not and, should they vote, for whom.

Dr Gonzi will want to target that element. The pre-Budget document suggests that he believes it to lie within the lower middle class, for which read the above average income group with children. That is why he will be tinkering with eligibility to children's allowances.

That calculation suggests further that the government is giving up hope on adjusting the tax system to leave more disposable income in the pockets of the lower income groups. Persons in such categories did not benefit from the income tax changes that became effective during the current basis year.

In fact they can only benefit if the social security rate is reduced, at least for them, from its present level of 10 per cent, or if they are given tax credits, or from both. It is highly unlikely that the Finance team will drop the 10 per cent rate. Whilst tax credits have yet to be explored properly for them to become part of the tax system just yet. To be effective they would have to be such that they give actual funds to those who are not liable to tax. Maybe that is being worked out. Possibly the Labour Opposition has tax gurus who are assessing the implications of going down that avenue, drawing initially from experience elsewhere.

Either way, I do not see a carefully thought out tax credit system being announced in the coming Budget. Dr Gonzi will target the lower income groups with rhetoric regarding overall well-being and the apparent ability of the labour market to absorb redundant workers, while sticking to giving a bit more money to middle income groups with children under 16.

It is a delicate strategy which could easily misfire. But governing, especially in the last year of an administration's life, is all about delicate calculations. There will be quite a few more of those in the Prime Minister's thinking cap. The most delicate of all centres on which way will prices go. The downward trend in recent months according to the indices is countered by complaints that the indices do not tell the whole story.

Nevertheless, the public's consciousness has become accustomed to the publicity drums beating out the news that prices are falling. Should prices begin to rise because of the switch from the Malta lira to the euro, that will input into the PM's calculations the urge not to delay the election beyond February.

For the time being, however, he is looking at the next horizon, hence the double implication of presenting the Budget in mid-October. In the 10 working weeks that remain, the Finance team will have to check and recheck the political wrapping paper for the fiscal proposals. It is significant, though only the Alternattiva Demokratika spokesman on finance picked this out, that the pre-Budget consultation document did not offer any costing to the ideas floated there.

It is endemic to discussion of financial measures in Malta not to put a figure to them when they are first floated. Last year the Prime Minister did say that he had so much to play around with, only to forget what he had announced and go for considerably more.

One might say that he will be tempted to do that this year, this being the last Budget before the election. Temptation and realisation are two different things. The tax take is buoyant, largely due to income tax receipts.

Social security contributions are also running well. But it would not have escaped the attention of the Finance team that crude oil prices are soaring once again. True, the US dollar has fallen quite sharply, but it is not improbable that the fuel surcharge is not covering the current and forward cost of sourcing our supplies.

The last thing the PM would wish to do is to start raising the surcharge again as the election approaches. That can only be avoided if the government lets the Treasury absorb more losses than forecast, which in turn would reduce the amount the government would wish to place in people's pockets through the Budget for 2008.

Budget time is not just like any other time, whatever anyone might say.


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