Pre-budget document: 'premature to commit to tax cuts'

The Prime Minister said today it was premature to make a commitment about tax cuts in the forthcoming budget since the price of oil had risen 45% since the election.

He was replying to questions after launching the pre-budget 2009 document, entitled “Together for a sustainable future”.

Dr Gonzi said the economy was projected to grow by 3 percent by the end of this year but Malta, like the rest of the world, was facing problems from galloping oil prices.

He said the government’s priorities remained education, employment and the environment.

The government, he said, wants more investment in alternative energy.

On the proposed car registration tax, Finance Minister Tonio Fenech said this will be replaced by a system that is based on the polluter-pays principle and which seeks to address the country’s environment and congestion challenges. Vehicles, he said, would be taxes on the basis of their emissions and size.

He said the government was proposing to further assist SMEs and promote further investment in IT and the infrastructure, notably the roads

The focus in the health sector would be on improving the primary healthcare system.

Replying to questions, Dr Gonzi said the government is carrying out a study on the impact of the surcharge on families in order to serve as a platform for the revision of the water and electricity tariffs.

Mr Fenech added that the increase in water and electricity prices was not having an effect on Malta’s competitiveness. He also ruling out the privatisation of Air Malta.

On income tax cuts, Dr Gonzi said the government was committed to reducing taxation, but this had to be seen against the economic situation. It was premature to make any form of commitment for this budget since oil prices had risen 45% since the election.

The pre-budget document is available on the website www.budget2009.com.mt.