Ferocious blow to tourism – Muscat

Instead of reducing the burden of the hefty water and electricity bills, the government removed energy allowances given last year without having the guts to say so, Opposition leader Joseph Muscat charged yesterday in his reaction to the Budget.

“Lawrence Gonzi boasted that he saw the economic storm coming. But he took your umbrella and locked you outside to be drenched in the floods,” Dr Muscat said aptly, after a morning of heavy rainfall.

He said this put an additional €11 million burden on families and businesses following last year’s tariff hikes, which he labelled “the biggest austerity measure introduced in Malta over the past 25 years”.

Addressing a press conference which, unlike last year’s, was open to journalists’ questions, a confident Dr Muscat slammed the government’s increase in VAT on tourist accommodation.

“This is a ferocious blow to tourism,” Dr Muscat said, adding that the move seemed to have been taken without any consultation and would put the industry’s 40,000 jobs in jeopardy.

He challenged Dr Gonzi to declare whether any studies had been carried out to support the “heavy-handed” decision to increase VAT, which in light of the British austerity measures would exacerbate the challenges facing tourism.

He also said the government had, for the third time, failed to reduce income tax as Dr Gonzi promised he would do during the first Budget of this legislature.

The Opposition leader said Dr Gonzi was fully aware of the impending economic crisis when making this promise and actually mentioned it as a way of counteracting these difficulties by spurring economic growth.

“I had agreed with this logic,” Dr Muscat said, when asked what he would have done differently to combat the deficit if he were Prime Minister.

In this vein, he said the government owed people €47 million each year, which now added up to €141 million – an average of €600 per couple per year.

Dr Muscat pointed out that nothing had been done to fight “corruption tax” and instead the government boasted about the controversial power station extension.

Meanwhile, fuel prices were raised, a measure that would reduce people’s purchasing power. And nothing was done to fight the cost of living.

He said the government had promised a surplus in this year’s deficit but missed its own target by 25 per cent, despite a tax amnesty and selling various assets.

“This is Dr Gonzi’s usual game... Now he will spice things up just before the election but if you trust him again he will take back what he gave you, with interest.”

Referring to Dr Gonzi’s promise that the Budget would show people their sacrifices had paid off, Dr Muscat said people got nothing and instead of improving things, this Budget put more pressure on families and businesses.