Finance Minister Edward Scicluna yesterday confirmed a plan to introduce new indirect taxes in the next Budget to yield an extra €50 million in revenue during 2014.
The Minister, who pencilled the Budget in for November 4, said the increase was on the cards but added “nothing is cast in stone”.
Asked how this squared up with Labour’s pre-election pledge not to raise taxes, Prof. Scicluna argued that the Government could not lower taxation revenue when cutting the deficit.
In a direct reference to the slashing of income tax – a measure introduced by the previous PN administration for the period 2013-2015 – Prof. Scicluna said “it is obvious that if the Government is losing some of its revenue it will have to get it from other taxes”.
“We have already said that we will shift to more indirect taxes and that is what we’re going to do,” he said.
Pressed to state what type of new taxes he will be introducing, Prof. Scicluna said the Government was still studying various options and details would be announced in the Budget.
In a report sent to Brussels earlier this month, the Government said it had already revised its spending downward by some €21 million over the Budget projected for this year.
Asked to clarify where these Budget cuts had been made, Prof. Scicluna said these were not cuts but “savings”.
“We didn’t cut any money but we made savings from some 300 budget lines, particularly in areas where the budgeted money was not going to be spent,” he clarified.
Some of these savings were immediately spent in other areas, particularly in the health sector, he said.
“If it weren’t for these savings we wouldn’t have been in a position to lower the deficit to under three per cent of GDP this year...and on that we are not even certain as we have to wait to see whether we have managed it by the end of this year,” he added.
Last May, the EU started an excessive deficit procedure against Malta that obliges it to lower its deficit to under three per cent of GDP by the end of 2014.
The island ended 2012 with a deficit of 3.3 per cent of GDP.