‘Wrong time’ to lower the rate of income tax
Lowering the income tax rate to25 per cent “would not be prudent” given ongoing economic uncertainty across Europe, Prime Minister Lawrence Gonzi said yesterday.
Speaking on Radio 101, Dr Gonzi said that although he believed the lower rate should be introduced eventually, the upcoming Budget was probably not the best time to do so.
“Look around us. Socialist governments, like that of Francois Hollande in France, are raising taxes. We don’t agree with that strategy but we have to ensure sustainability,” he said.
The Prime Minister has had to field questions about lowering income tax throughout this legislature following an electoral pledge to cut rates made before the international economic turmoil began in earnest.
Although economic statistics last week showed that Malta was officially out of recession, Dr Gonzi cautioned that it would be some time yet – “maybe four or five years for EU economies and perhaps a decade for the entire crisis” – for its effects to be overcome.
That notwithstanding, Malta was doing well in comparison to many other countries.
News of GDP growth, increased employment figures, record tourist arrivals in July and an unchanged A3 negative out-look from ratings agency Moody’s was further confirmation, Dr Gonzi added.
“The Labour Party’s been constantly saying that Malta’s running into a brick economic wall but (last) week’s economic news discredits that.”
The PL immediately shot back, saying Dr Gonzi was reading statistics back to front.
“Today, the Prime Minister said that unemployment was decreasing. Perhaps his consultants haven’t yet informed him that, according to Eurostat, unemployment rose from 5.8 per cent in April to 6.3 per cent in July,” the party said.
Dr Gonzi mocked the Labour Party slogan Futur Li Jgħaqqadna (A Unifying Future), saying the tagline was “pretty rich coming from a party that’s spent the past four years trying to divide us”.
He then waved off suggestions that ongoing strife within the Nationalist Party, with MP Franco Debono now threatening to table a motion of no-confidence in Health Minister Joe Cassar, could be damaging the country.
“Of course, I’m concerned – very concerned – about internal party problems. But the country’s moved forward and that’s what interests people.”
Dr Gonzi also insisted that the draft Cohabitation Bill did what was intended: ensure that both parties to a relationship had some legal protection.
The draft Bill has been staunchly criticised by equal rights activists for not putting cohabitation on a legal par with marriage.
“This Bill is about cohabitation, not marriage. Let’s set the controversy aside and work to ensure all cohabiting couples have rights and obligations.”
He reminisced about going abroad with recently deceased former Prime Minister Dom Mintoff in the early 1990s and made a veiled appeal to moderation in political discourse.
“I had respect for him and he had respect for me because, although we disagreed, we both knew that each was doing what they thought best for the country.”
But that did not change the fact that many of Mr Mintoff’s policies were bad for Malta, Dr Gonzi noted.
The Prime Minister also spoke briefly about Stephen Brincat, the former head of Mater Dei Hospital’s Oncology Department, who resigned two weeks ago.
“I have a huge amount of respect for Prof. Brincat and defer to his medical knowledge.
“But we didn’t agree on administrative matters.”