The government will not be honouring its electoral pledge to cut the maximum income tax rate by 10 per cent in tomorrow's Budget, though a "slight" change in tax bands may be announced. Finance Minister Tonio Fenech will present a green budget tomorrow, with several fiscal incentives to encourage people to invest in alternative energy. But there will be few tax cuts, The Sunday Times has learnt.

Despite concerns over the state of public finances, some social partners believed that the government could forge ahead with its popular electoral promise to cut income taxes - to mitigate the effect of the steep rise in water and electricity rates.

The Nationalist Party's electoral programme had pledged to reduce the maximum income tax rate from 35 per cent to 25 per cent and Prime Minister Lawrence Gonzi had subsequently indicated that the measure would be introduced this year.

But tomorrow's Budget will show that the deficit has overshot projections - it rose by €87.6 million between January and September, compared with the same period last year.

With the uncertainty arising from the global economic situation, together with its impact on the local economy and government revenues, the government will adopt a markedly different approach to the one taken in last year's tax-cutting Budget.

It is even expected to 'slightly' increase excise tax on petrol and diesel.

However, the measure might not be a drastic blow to consumers' pockets, since falling oil prices mean that Enemalta should by February be in a position to reduce prices on petrol station forecourts.

Enemalta had purchased its entire diesel and petrol requirements last June for the rest of the year, when oil prices were double what they are today.

One electoral pledge which is expected to be fulfilled is the government grant of five free energy-saving light bulbs to each household in a bid to cut down on electricity bills.

Around 4,500 households will also be benefitting from a €2 million subsidy scheme, which will see the government footing two-thirds of the cost of solar water heaters.

There will also be a €10 million package of incentives for renewable energy in industry, according to sources.