Leaders tussle over the timing of tax cuts

In their first face-to-face encounter following the Budget speech, the Prime Minister and the Opposition leader yesterday accused each other of endangering jobs in a debate dominated by income tax and utility tariffs.

Speaking on Church radio RTK, Lawrence Gonzi defended the decision to postpone the election pledge to cut income tax and accused the Labour Party of irresponsibility when it insists that it should be implemented now.

He also defended the high water and electricity tariffs, saying he preferred to use public finances to safeguard jobs rather than subsidise all and sundry.

“Bills do hurt families but we are helping those who cannot afford them. It is the deficit that endangers jobs and we are tackling it,” Dr Gonzi said, pointing out that it was the higher oil prices that pushed bills up.

Dr Muscat stuck to his criticism, accusing the Prime Minister of postponing the income tax pledge until the next election.

“The Prime Minister did not give the people the necessary tools to fight the recession even though he had promised those tools at election time when he could already see the storm approaching,” Dr Muscat said. Had he been in government he would have cut income tax while controlling expenditure.

He described the utility tariffs as the single largest austerity measure in 25 years, insisting the bills endangered jobs.

During the debate Dr Gonzi played defence for most of the time and on more than one occasion accused Dr Muscat of confusing matters.

On the other hand, the Opposition leader accused Dr Gonzi of not being sincere with the people.

Dr Gonzi said the income tax pledge would be honoured at the right time however it will not be implemented at all costs. “I prefer people accusing me of not implementing a promise rather than being remembered for taking a decision that would break a country,” Dr Gonzi said when asked by the programme host whether he would still cut income tax if the economic situation did not improve.

Dr Muscat said it was a shame for the Prime Minister to be proud of the fact that 68,000 people did not pay income tax because this meant a lot of people were receiving low wages.

“God forbid these people had to pay tax. No wonder our average pay is very close to the national minimum wage,” Dr Muscat said, adding people’s pockets were being squeezed.

The Prime Minister was also on the defensive when Dr Muscat raised question marks about the financing of major government projects such as the White Rocks sports village, Malta Enterprise’s corporate village in Mrieħel and the Renzo Piano City Gate regeneration.

While acknowledging that transparency was an important issue, Dr Gonzi said these projects would generate jobs and it was not right to raise suspicions on each and every initiative.

He also confirmed that the government was in talks over the purchase of St Philips Hospital from the private sector to use it as a rehabilitation hospital but nothing had yet been concluded.

In a tit for tat, Dr Muscat rubbished the calculations made by TV presenter Lou Bondi on Monday of what Labour’s financial and economic proposals would cost.

Making Mr Bondi’s €444 million estimate his own, Dr Gonzi said the country would be running a tremendous deficit had Dr Muscat been prime minister.

The Opposition leader brus­hed off the estimate, pointing out that the calculation included among others a measure to reduce VAT to 17 per cent from 18 per cent when this was not a Labour Party proposal.