The political fisticuffs over the costings of the Labour Party proposals to put money back in people's pockets go on without respite. The estimates given by the Labour Opposition and the Government could not be wider. What's it all about and who's right? It really is about not giving precise definitions, supported with exact details of the workings involved, to arrive at proper costings. The two sides attempted to be precise where precision is impossible.

The four Labour proposals, first aired (aside from the surcharge proposal) by Opposition leader Alfred Sant in his reply to the 2008 Budget Speech, were initially presented without any attempt at costings. Following figures suggested on a television programme, the Labour side came up with its own hugely differing estimates. A mother of spats developed. Let me throw in my euro-cent's worth, taking each proposal one at a time.

Proposal 1: to make overtime earnings non-taxable: I was one of two economists who expressed disagreement with the proposal (The other was Karm Farrugia). I disagree not because the measure could lead to abuse - any measure can be abused; Income tax and VAT are good examples. I'm against the proposal because I believe everyone should pay a little bit of tax on earnings. That is the way to cultivate fiscal morality.

I'm also against the proposal because it is invidious to those who work part-time. They are taxed at 15 per cent up to earnings of Lm3,000 yearly. This means a situation would develop where any amount of overtime - extra time - would be zero taxed, while part-time work - also extra time - would be taxed.

As to the cost of the proposal, it really depends on the base: how much overtime is worked? The Prime Minister said in the Budget speech that declared earnings from overtime stood at Lm12 million. Freeing that from income tax would lead to a loss of around the Lm2 million as suggested by Labour. However, the Prime Minister gave a different - and more likely - figure in replying to Sant's speech. Lawrence Gonzi said he had calculated that the cost of Labour's proposal in foregone tax would be Lm12 million. That suggests (using a tax rate of 15 per cent) that earnings from overtime amount to some Lm80 million yearly - not Lm12million. Freeing such a huge amount from any tax at all would obviously be far more costly that Labour's Lm2 million based on earnings of Lm12 million. So, which is which? Can we be given an official estimate by the National Statistics Office of overtime earnings? The figure should feature in the working data used to compile the National Accounts.

Proposal 2: to cut the water and electricity surcharge by half: The Government said it would cost Lm20 million annually. Labour says it would cost Lm15million, with that amount going into disposable income which, once spent, would yield Lm3 million in VAT. The MLP therefore gave a net figure of Lm12 million. Both estimates are nearly a waste of time. The surcharge fluctuates with the price of oil and its derivatives. There can be no static estimate. As the surcharge varies along with the oil price, so will the cost of cutting it by half.

Proposal 3: to introduce an interest subsidy of one per cent on home loans up to Lm50,000, should interest rise above 4.5 per cent: Labour has to be referring to the Central Bank base or intervention rate, which from January 1 will become that set by the European Central Bank. The cost of a one per cent subsidy will depend on to whom it applies. If it applies to all borrowers with a home loan not exceeding Lm50,000 the cost will be close to the Lm60 million cited by the Government. (Arrived at by applying a one per cent subsidy to two-thirds of all home loans, currently running at around Lm800 million, according to the Central Bank's Quarterly Review.)

But, if the subsidy is restricted to first time borrowers, say numbering 2,000 annually, it would amount to Lm1 million in the first year, rising thereafter with new borrowers, if the base rate stays above 4.5 per cent. Again, therefore, which is which?

Proposal 4: public holidays and feasts which the current Government took away from the workers (because they fall on a weekend) will be given back by a Labour government: The MLP says that would not cost the Treasury anything. Nearly right - because the basic pay to public sector workers would not change. But, not quite. There would be the cost of substitution and overtime that has to be worked, say Lm500,000 to Lm1 million yearly.

The Government says the cost would be Lm5 million: Not really, if that is intended to counter the Labour estimate. Probably what the Government means is that there would be a loss of Lm5 million in the output of the whole economy. In that case Lm5 million might well be an underestimate.

Figures are dry and boring. Yet, once they are part of the national debate, the politicians using them should at least ensure that they are as correct as can be, and also make their workings public. Voters are adults, after all.

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