The Finance Ministry said today that the main revenue-raising measures to be announced in the 2014 Budget and the additional revenue from social contributions as a result of the 2006 pension reform will more than offset the negative impact of the gradual widening in the income tax bands which started with the last Budget and will be continued.

"The main fiscal consolidation measures for 2014 include the 2006 pension reform initiatives, a number of indirect tax measures to be announced in the budget, a measure introducing a non-domestically paid fee for a new service, and measures which restrict recruitment in the public sector," the Draft Budgetary Plan says.

In addition the equity injection in Air Malta will be almost two-thirds less than this year. 

The Finance Ministry intends to rake in € 23.9 million from indirect taxation measures to be announced in Budget 2014, which Minister Edward Scicluna said would be imposed gradually.

This is lower than the figure given in a document submitted earlier this month to the European Commission outlining government action to cut the deficit. This put the take from new indirect tax at €31.5 million.

But the Government will more than make up for this gap in revenue by cutting planned funding for “expansionary measures” partly intended to spur growth and employment. This expenditure will be slashed from the €40.3 million in the document sent to Brussels, to €27.7 million under the latest plan.

The expansionary measures are aimed mainly to spur growth and employment. Other measures are aimed at distribution of income towards the most needy households in the Maltese society.

These measures will be sustained by stronger drives against tax avoidance and tax evasion, and the control of public expenditure through an ongoing Spending Review aimed at identifying efficiency gains in public expenditure and controlling the rise in its discretionary elements.

As previously stated, the government expects the deficit to be reining in to 2.7 per cent of GDP.

See the report by clicking on the pdf below.