Arguments fly as Scicluna says Budget raises the tax burden
Labour MEP Edward Scicluna said this morning that the Budget would raise the tax burden on the people.
But Nationalist MEP Simon Busuttil immediately denied the claim, saying the people would pay less tax but the country would earn more tax revenue.
During a discussion on TVAM, Prof Scicluna said the Budget measures would raise tax revenue by €200 million and the tax cuts would only amount to €10 million which would be enjoyed by the top earners.
The tax burden would rise to 44 per cent of the people’s income, from the current 42%, even though the government had told the IMF that the tax burden would drop to 40%, Prof Scicluna said. The government was projecting an increase in revenue from income tax of €83 million, an increase in revenue from social security of €51 million, an increase in revenue from licences of €18 million, and increases of €15m from fines and €28m from VAT.
Dr Busuttil said the tax rates in Malta were among the lowest in Europe, even though in ten countries salaries were comparable or lower.
The Maltese would not be taxed more, but the government’s tax revenue would rise because more and better jobs were being created and the people could spend more. Economic activity generated tax revenue. This was a budget that stimulated economic activity and put money in the people’s pockets.
Furthermore, he said, all sectors of the population would benefit from the Budget, such as through the increase in children’s allowance and other social benefits. The tax cuts announced yesterday would benefit all those who touched the tax rate of 35%. The measures were built on a series of other tax cuts given over the years to other categories of the population. The time had now come for the government to start implementing it electoral promise to reduce the top rate of income tax.
Replying to questions, Prof Scicluna reiterated that a Labour government would retain all benefits given to the people but could bring in corrections for other sectors for reasons of equity. He however avoided direct replies when asked what he would remove.
Dr Busuttil said Labour should be politically honest. One could not retain the Budget measures and still say utility tariffs would be reduced. It was one or the other, unless a Labour government intended to widen the deficit, with consequent problems for the country.
Prof Scicluna said Labour would retain the Budget framework in order to maintain stability and continuity, which was what the country needed.