This administration’s last Budget will not be an election Budget but a “responsible” one which prioritises the creation of jobs and economic growth, Finance Minister Tonio Fenech said yesterday.

Although he did not rule out the possibility of delivering on the maximum income tax cut promised prior to the 2008 general election, Mr Fenech said he was hoping there would be a time when the country would be in a position to afford it. However, he said there were other priorities where the country had to channel its limited finances. The vision was still to continue to reduce tax but this had to be done responsibly.

Addressing a news conference to launch the 2013 pre-Budget document, aimed at stirring a discussion on possible measures, the minister rebutted claims that the government had not lived up to its electoral promises.

He noted how in the first Budget following the 2008 election, the government had modified income tax bands and had done so for three consecutive years.

He said families, parents, mothers and businesses had all witnessed tax cuts.

Mr Fenech said his main target was fiscal consolidation and driving down the deficit figure.

The target is to reduce the deficit by five percentage points, from 2.2 per cent this year to 1.7 per cent next year in its path towards achieving a balanced Budget as well as a “prudent reduction” of debt levels to bring it to under 60 per cent of GDP.

Mr Fenech said the target was still achievable though he admitted the government was around €40 million away at this point in time.

He explained that the increase in deficit registered in the first half of the year was primarily due to the €25 million poured into Enemalta’s coffers to absorb some of its debts and prevent it from increasing energy bills.

Asked why the debt has increased so much in the first part of the year, reaching almost 75 per cent, Mr Fenech said the government borrowed up to €500 million which it did not really need but did so because of the favourable interest rate.

However, he insisted the government was on track to achieve its targets by the end of the year.

Mr Fenech said other budgetary aims would be the inclusion of the balanced budget rule in the Constitution and to continue to use taxes to incentivise economic growth.

He said the government also aimed to continue to strengthen family-friendly measures.

The Budget would give particular importance to education, continue with the reforms of the service and non-contributory disability pensions and the review of supplementary assistance for over 65s.

Moreover, the government would continue combating tax evasion.

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

He explained that Enemalta was spending €500 million on the interconnector linking Malta to the European energy grid and the Delimara power station extension and prices had to reflect the price of oil and the investment.

Comments on the pre-Budget document may be sent on malta.budget@gov.mt.

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