Budget will focus on job creation and economic growth - minister

The next budget will be a responsible one that will continue to prioritise economic sectors through the creation of jobs and more economic growth, Finance Minister Tonio Fenech said.

Speaking during the launch of the pre-budget document this afternoon, the minister noted that the gross domestic product contracted by one per cent in the first quarter, namely because of the €25 million poured into Enemalta’s coffers to make up for increase in the price of oil so that bills could remain unchanged.

Despite this, he said, Malta was performing better than the EU average.

Asked whether the 2.2 per cent deficit target was still achievable since the country was already €45 million off target, he said it was and the aim was to continue reducing the deficit by 0.5 per cent each year.

Mr Fenech said that the main aim of the budget would be to strengthen fiscal stability with an objective to continue towards the achievement of a balance budget and a prudent reduction of debt levels to bring these to under 60 per cent of the gross domestic product.

Other aims will be the inclusion of the balanced budget rule in the Constitution and to continue to use taxes to incentivise economic growth.

Mr Fenech said that the government also aimed to continue to strengthen family friendly measures.

The budget would give particular importance to education, which was crucial for economic growth, continue with the reforms of the service and non-contributory disability pensions and the review of supplementary assistance for those aged over 65 years.

Particular attention would also be given to the environment through investment in alternative energy, deriving clean energy from waste, water conservation and rural development.

The government would also forge ahead in its ambition to turn Gozo into an ecological island.

He said the Air Malta rebranding was being done now and not after the restructuring because this was needed to help the airline sell more seats.

Asked about Franco Debono’s criticism regarding the water and electricity rates, he said that Enemalta was spending €500 million on the interconnector and the Delimara plant and prices had to reflect oil prices and investment.

The priority with social partners, he said, was never to reduce these bills but to create jobs and investment.

“I am proud of my achievements and I will leave judgement to other people.”

Asked about the fact that the income from Maltco’s concession was being included in this year’s budget in its totality, Mr Fenech said the government had budgeted to collect €25 million through this agreement but managed to get €40 million. Over and above this, Maltco had to pay seven per cent tax on its sales and the annual licence.

Asked about the 2008 promise to reduce the maximum income tax bands from 35 to 25 per cent, the minister said that since that promise was made, various measures were taken to reduce other tax bands and tax.

The government, he said, was focused on those who really needed help. The vision was still to continue to reduce tax but this had to be done responsibly. He hoped the time would come when the country would be able to reduce its maximum tax rate.

http://www.finance.gov.mt/image.aspx?site=MFIN&ref=Pre-Budget%20Document%202013