A fiscal deficit reduced to 2.8 per cent of GDP through lower public expenditure and modest tax rises was the main aim of the government’s Budget for 2011 presented on October 25 last year.

In an attempt to reduce public spending, government departments were required to improve their efficiency by at least two per cent while the minister said there would  be less recruitment in the public sector and the government’s procurement methods would be reviewed.

The minister also promised a system of independent auditing  to evaluate samples of persons receiving free medicines in order to combat abuse in this sector.

The minister in his Budget speech last year also announced an increase in VAT on tourism accommodation  from five to seven per cent while excise duty on fuel went  up by 3c per litre. The tax on cigarettes and tobacco was increased by three and four per cent respectively, the tax on local beer is up by 1c per 25cl bottle and the tax on spirits by 13 per cent.

Despite an emphasis on reduced government spending, expenditure on education and health was raised to €340 million and €378 million respectively.

A cost-of-living adjustment of €1.16 a week was announced and the supplementary allowance for low-income earners was increased.

The minister also announced the introducion of the car scrappage scheme (which has since been closed after being fully taken up).

The Malta Tourism Authority budget was increased to €35 million and fiscal incentives for parents sending their children to private schools were increased.

Budget 2011 At a glance

VAT on tourism accommodation went up to 7% from 5% 

Car scrapping scheme announced

Increased tax rebate on private school fees

Increased tax on fuel, cigarettes, beer and spirits

€1.16 cost of living increase

More spending on health and education