Updated - Adds PN reaction
The Labour Party insisted today that savings made by the government through the elimination of various subsidies meant that it had no justification for delaying the tax cuts promised at the general election.
Labour finance spokesman Charles Mangion, referring to an interview given to The Sunday Times by the finance minister, said the governemnt was conducting economic planning according to the electoral cycle in the interests of the PN.
Prior to the last general election, he said, the PN promised to reduce the top rate of income tax to 25%.
Since then the government had taken measures which drastically reduced the people's purchasing power. The government had also saved €80m by removing the subsidy on water and electricity and made further savings by closing the dockyard.
Yet it was continuing to put off the tax cuts.
The argument that no tax cuts could be given because of the international financial crisis did not hold water since the Maltese financial institutions remained strong.
Dr Mangion also asked a series of questions which he hoped the minister would reply to.
He asked on what economic and fiscal criteria had Lawrence Gonzi promised to reduce the top rate of income tax to 25%;
Was the tax reduction compatible and consistent with the medium term objective for Malta established by the EU, which called for a budget surplus in order to reduce the national debt?
Could the minister confirm that the fact that the Stability Programme 2009-2012 did not incorporate a tax cut mean that there would not be any tax cut?
Dr Mangion also observed that Mr Fenech had declared that with the euro changeover, the Central Bank passed on to the government €40m from reserves. Since public record showed that in the years 2007-2008 the government only received €29.8m and €28.7m, could the minister say how this income was classified?
PN REACTION
The Nationalist Party in a reaction said Dr Mangion's statement showed how cut off the Opposition was from reality. The Labour spokesman was ignoring the fact that since the general election the world had seen an explosion in oil prices, a banking crisis and the worst recession in eighty years.
The government had wisely invested in Maltese industry in order to enable Malta to ride the storm. The contrast now between what was happening abroad and in Malta could not be sharper. In Malta, foreign investment was flowing, the government deficit was being narrowed, the economy was picking up, the banks were among the strongest in Europe, and the government was helping the people invest in alternative energy.
Abroad, some countries had unemployment of 20 per cent, salaries and social services were being cut, taxes were rising and governments were begging the IMF for assistance.
The PN also pointed out that when Dr Mangion started his political career, at the time of the Labour government, the top rate of income tax was 65 per cent.
And as for the energy prices, Dr Mangion had been part of the Labour government which imposed extraordinary tariffs when the price of oil was just $12 a barrel, the PN said.