The Government this evening announced a 25% reduction of electricity bills, a widening of tax bands for parents, an increase in stipends, and incentives to get people off the unemployment register. The ceiling on preferential income tax of 15% for part-time work was raised to €10,000

The Budget speech, read out by Finance Minister Edward Scicluna, includes 120 measures and incentives. No new taxes were  introduced, but the prices of cigarettes, beer, alcohol, bunkering and cement have been raised. The price of cigarettes will go up by 30c.

Duty on petrol and diesel will also go up, but the price of diesel will not be affected. The price of petrol will go up by 1c in January but it will then be locked for three months.

SEVEN-YEAR PROGRAMME TO REFUND VAT ON CARS

The registration tax on small vehicles will be reduced while licences for the bigger ones will be raised. The Government will launch a seven-year scheme for the refund of VAT paid on the registration of vehicles between 2004 and 2008.

A new vehicle scrappage scheme will also be launched, with grants reaching up to €900. The grants will also be given to those who convert their cars to autogas.

DEFICIT TO GO DOWN

Prof Scicluna said the deficit this year will go down to 2.3 per cent and narrow further to 2.1 per cent next year.

The economy was conservatively estimated to grow by 1.7 per cent next year.

He said the principles of the Budget were financial sustainability, reduced spending, reduced costs for energy and water, improved competitiveness, a reduction in bureaucracy, diversification of the economy, and making work pay.

COLA ADJUSTMENT FOR WAGES, STIPENDS

Workers will be given a cost of living wage increase of €3.49 per week and the weighting of the products on which the formula is based will be reviewed next year in a Household Budgetary Survey.

Stipends will be raised by 1.9% in line with the cost of living. This will be the first rise in stipends since 1999.

INCOME TAX CUTS

As laid out in the Budget speech a year ago, the process of income tax reduction for those earning up to €60,000 will continue, with the top rate being reduced from the current 32 per cent to 29 per cent.

However, as a measure of social justice for lower income earners, parents will  not pay tax on the first €9,800 of their income instead of the current €9,300, an average saving of €75 per year.

Eligibility will apply for parents with children at school who are up to 23 years old instead of the current 21.

PART-TIME WORK

The preferential income tax rate of 15 per cent on part-time work is to be extended to income up to €10,000 from the current €7,000.

Part-time self-employed will see this benefit rise to €12,000 and they will henceforth also be able to employ people.

Minimum wage earners and pensioners whose income does not exceed minimum wage will not pay income tax.

Footballers will have their income from the sport taxed at 7.5 per cent in a scheme agreed with the MFA.

The Government will remove tax on auctions and cap interest on duties causa mortis.

People renting out property will have the option of a final withholding tax of 15 per cent, and the Government has warned that it willclamp down on evasion.

BENEFIT FOR FIRST TIME PROPERTY BUYERS

First-time property buyers will have duty on the value of their property up to €150,000 waived. Duty currently is 3.5 per cent. The measure applies for one year.

Furthermore, value estimates will no longer be done by the government architect.

Prof Scicluna said a number of measures were being taken to simplify payment of overdue VAT and income tax. Among them, it will no longer be incumbent on the courts to jail second-time VAT offenders, and repeat offenders can instead be fined.

MALTA OIL AND GAS CORPORATION

The Government will be setting up a Malta Oil and Gas Corporation which will  handle all matters related to oil exploration licensing and promotion.

RENEWABLE ENERGY

Prof Scicluna said the government will be announcing new incentives for people to buy renewable energy equipment such as solar energy. Households may voluntarily opt for energy audits. A pilot project of intelligent lighting will be introduced in Gozo.

FREE CHILDCARE CENTRES

Childcare will be made available for free from next year in a scheme which will also involve the private sector, so that people who already have their children there will not have to transfer them. The tax-free amount for parents sending children to private childcare centres will be raised to €2,000 from €1,300.

From April, the government will also introduce Breakfast Clubs in state schools, an hour before schools start. Teachers will be present as an option but will be paid for the service.

INCENTIVES FOR WORKING WOMEN

Prof Scicluna said that as from next year, married women aged over 40 who return to work after at least five years will not need to include their salary in the joint tax computation with their husbands as long as their income does not exceed the minimum wage, effectively meaning that they will not pay income tax. This will yield them a saving of €800 annually.

MEASURES FOR THE UNEMPLOYED

The Budget includes a new system of incentives to encourage the unemployed to take up internships and apprenticeships for both the unemployed and their employers.

People aged 45-65 who would have been unemployed for two years and who start to work will continue to receive their unemployment benefit at the rate of 65 per cent for the first year, 45 per cent for the second and 25 per cent for the third. 25 per cent of the unemployment benefit will also be given to the employers.

SINGLE PARENTS

Single parents who opt to follow intensive vocational courses will be paid a credit of up to €1,000.

 

EDUCATION

Prof Scicluna said the steepest increase in expenditure will be on education, up by 12 per cent. The government will be building five new schools in this legislature and introduce a pilot project on the use of tablet computers by schoolchildren.

Talks will be started with the MUT on the teachers’ sabbatical. Spending for the University will rise by 13 per cent.

 

INDUSTRY

In other measures, Prof Scicluna said the government will set up a Venture Capital Fund while the Microinvest scheme will be increased by €2 million.

WHITE PAPERS ON SHOP OPENING HOURS, CIRCUS ANIMALS AND WARDENS

White Papers will be issued on shop opening hours, a ban on circus animals, new means of mass transport, the procurement of medicines, and the local wardens system.

The MFSA will be tasked with a review of bank charges.

DALLI REPORT ON MATER DEI

A report by John Dalli on the situation at Mater Dei will be published in the near future and discussed at a national seminar.

BAN ON HEAVY VEHICLES, HORSES DURING RUSH HOUR

The Government, Prof. Scicluna said, will ban horses and heavy vehicles from the roads during rush hour.

Work will be speeded up on major projects such as the Kappara flyover and the Government will consider long term projects such as a monorail or underground system or a greater use of sea transport.

From next month, the Valletta CVA will be adjusted to allow free parking every day after 2pm, with Saturdays and Sundays being free of charge.

Prof Scicluna said the Government will launch a study on possibly lengthening the Gozo helipad to take fixed wing aircraft.

MORE MEDICINES TO BE AVAILABLE FREE OF CHARGE

Prof Scicluna said more medicines will be made available free of charge, benefiting especially those who suffer from ME, Fibromyalgia, multiple sclerosis and ADHT.

The Government will henceforth also pay for two parents to accompany sick children abroad, instead of one parent as at present.

Duty on the transfer of property from parents to children with disabilities will  be removed.

THIRD PILLAR PENSIONS

Incentives costing €1.5m will be given next year to encourage people to opt for private pensions.