The first purely Labour Budget, that for 2014, presented by Finance Minister Edward Scicluna yesterday evening, had to aim at four broad targets. The Prime Minister said it would be a budget with no surprises and later added it would be one for hard working people. The minister said it would start unfolding Labour’s policy to set the public finances to right, and that it would be a family budget. A tall order.

Was it met? I think so. In an inordinately long speech which ended up verging on verbosity, the minister announced multiple measures which, at one and the same time, were both business and labour friendly. This contrasts with the budgets presented in practically all of the rest of the European Union.

Prof. Scicluna accomplished this balancing act without fulfilling the fears of tax increases, other than through excise duties, including on petrol and diesel. And then with particular care not to hit car owners too much. Owners of relatively small cars later on in the speech were in fact granted reductions in registration and running expenses.

While on the subject of cars the Budget started fulfilling a rather rash promise made years ago by Labour in opposition that refunds of registration amounts taxed twice would be made. The adjustment, as was to be expected, will be paid in instalments, over seven years.

The Budget meets three targets – helping the family, encouraging hard working people to take advantage, and fostering growth – through considerable concentration on key areas. Taxation was addressed with a raft of reductions aimed at encouraging people to work harder and pay lower taxes, including part-timers.

Those on social benefits too close to the market wage they might expect – the poverty trap – are to be addressed with a sensible proposal which only gradually reduces social benefits and at the same time passes the reduction to those who employ such workers. A very worthwhile innovation if social security beneficiaries are really to consider taking up paid work.

It’s a very worthwhile innovation if social security beneficiaries are really to consider taking up paid work

And that is the way the first part of the Budget Speech went, with the minister announcing cut after cut in government receipts. He did so against a conservative – his term – background of reaching deficit targets this year and next year, such that the deficit will fall below three per cent. He did not say anything about Brussels’s reaction to the budget figures as presented, but presumably they went down well.

The background also included a loss in income tax revenue with the second cut on payments under the 25 per cent band of the income tax regime. This will cost the exchequer over €13 million in foregone income as the tax rate falls to 29 per cent. The Minister responded to criticism from those of us who hold the cut is anti-social by also tinkering with tax rates lower down.

He also responded to those who were scaremongering about student stipends by saying that they would start increasing from next year since the COLA statutory increase will now be applicable to them.

Prof. Scicluna, in addition to direct family measures, including further encouragement to married women to go back to work, spent a lot of time detailing how the health services would be improved. Gozo also came in for its fair whack of effort to increase foreign direct investment there.

The second part of the Budget Speech was essentially a continuation of measures or schemes started by the previous Nationalist government. One target which was not met, I felt, was that suggested by Prime Minister Joseph Muscat when he said there would be no surprises.

I for one was surprised by the downward tax adjustments announced by the Finance Minister, effective next year. The month-by-month and cumulative outturn will be followed with keen interest.

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