The main highlight of the 2012 Budget is without doubt the decision to introduce a new tax category called “parent computation” through which working parents will be able to save up to €420 each a year in tax.
The tax cuts, which will cost €10 million, are aimed at making the labour market more attractive for parents
The measure is aimed at working parents supporting children who do not work up to the age of 18. If the children are still studying at tertiary level, the age limit is extended to 21.
Finance Minister Tonio Fenech said yesterday that these tax cuts, which will cost €10 million, were aimed at making the labour market more attractive to parents.
Besides married couples with children, this income tax reduction will also benefit widows and widowers with children, single parents and separated or divorced persons who have custody of the children or pay maintenance.
A time-limited scheme for the introduction of VAT arrears will also be introduced.
The duty on fuel for the bunkering of ships outside territorial waters is to increase to €5 per tonne while the duty on cement will increase by €3 per tonne. The minimum excise duty on cigarettes will go up by 5.8 per cent on each packet of 20 cigarettes.
The government increased the amount it spends on supporting industry and attracting foreign direct investment to €14.2 million.
Fiscal incentives worth €3 million over three years are to be given to firms consuming more than 2GWhr of electricity per year that invest in energy-saving measures and in clean energy generation.
A total of €16.7 million have been allocated for upgrading the Bulebel and Ħal Far industrial estates and the service charge for industrial estates has been lowered to €3.50 per square metre.
MicroInvest, which extends a tax credit on 40 per cent of new investment and new jobs, will be extended for another year.
A new MicroGuarantee Scheme worth €20 million is to be introduced through which the government will guarantee loans for viable projects by businesses.
The Malta Tourism Authority budget has been increased by €1 million to €36 million and €20 million have been allocated for the restructuring of Air Malta in 2012.
A Malta Games Fund will be set up to strengthen the gaming industry through an investment of €150,000. In order to attract more experts in digital games to Malta, the 15 per cent income tax scheme will be extended to international professionals in this sector, such as game directors and game designers.
The tax credit scheme for women returning to the labour market is being extended for another year and €1.3 million will be spent on three new child care centres.
The government is to propose – within the Malta Council for Economic and Social Development – an increase in the duration of maternity leave by two weeks in 2012 and another two weeks in 2013, with the cost being borne by the government in the form of an allowance of €160 per week.
The registration tax on old Euro I to Euro III cars will increase to discourage their use and the car scrappage scheme will be extended for a further 3,000 cars.
A scheme will be launched to encourage the restoration of buildings by individuals and companies. This will consist of a final withholding tax of 10 per cent of income from rent for residential property and 15 per cent for commercial premises. A sum of €4 million has been allocated for projects in connection with Eco-Gozo vision.
The education budget has been increased to €23 million and €45.2 million have been allocated in support of Church schools. Parents of children attending private schools will have their tax credits extended as follows: from €1,200 to €1,300 in day care, reception and kindergarten; from €1,200 to €1,600 at primary level; from €1,600 to €2,300 in secondary level. A €1 million fund has been set up to support private schools in the areas of IT, children’s special needs, science, sports and teachers’ professional development.
In the health sector colorectal screening is to be introduced and further work will be done on the Oncology Centre.
The social sector has been allocated a budget of €1,020 million, of which €750.4 million will go to social benefits. The minimum rate for children’s allowance has been increased from €250 to €350 for every child, a grant of €300 per year will be given to pensioners over 80 who live independently in the own home and VAT on private nursing and home help services offered by the private sector to pensioners will be removed.
Next year’s weekly cost of living increase is to be €4.66 and the €35 TV licence has been abolished.
Mr Fenech said that Malta’s deficit for 2011 is estimated at 2.8 per cent of GDP, as projected, while the target for 2012 is 2.27 per cent of GDP. The country’s public debt for 2011 is projected to be 70.15 per cent of GDP, while in 2012 public debt is estimated at 68.91 per cent. Malta was projecting a GDP growth of 2.3 per cent in 2011.
Budget supplement stories by: Juan Ameen, Bertrand Borg, Sarah Carabott, Kristina Chetcuti, Anthony Manduca, Christian Peregin, Joanna Ripard, Kurt Sansone and Matthew Xuereb.
Photos by: Jason Borg, Matthew Mirabelli, Chris Sant Fournier and Darrin Zammit Lupi.