Prime Minister Joseph Muscat yesterday gave an assurance that the next Budget would not breach the EU’s Stability Pact, saying the European Commission had only asked for a list of the indirect taxation measures the government was planning to introduce.
Dr Muscat was reacting to the news that the Commission had requested clarifications from Malta’s Finance Ministry over the government’s draft Budget for 2015, which was submitted to Brussels on October 15.
“The issue in reality is one of timing, as some measures cannot be announced some three weeks in advance, before the Budget date,” he said.
Dr Muscat was talking to the Maltese press ahead of a working dinner and possibly a long night of negotiations on the first day of the EU summit in Brussels focusing on energy and climate change.
“What I can tell you is that, unlike other countries, there was no mention of a deviation from the stringent targets of the Stability Pact,” he said.
He expressed optimism that the issue would be resolved in the coming days.
Government sources told Times of Malta that the stumbling block might be possible increases in excise duty on products such as cigarettes, tobacco and fuel.
“Such measures cannot be announced in advance as there would be the risk of people stocking up large volumes of these products in advance to save money and consequently creating a problem of shortages,” a source said.
In the letter sent to the government by the Commission yesterday, seen by Times of Malta, EC Vice President Jyrki Katainen pointed out that the government was obliged to give certain details when presenting its draft to the Commission.
Expressing concern over the lack of detail underpinning the plans to increase indirect taxation, revise fees on market output and take measures to control the public sector wage bill, Mr Katainen gave Malta until today to furnish the information.
Malta was among a group of member states, which also include Italy, France, Slovenia and Austria, to receive a letter from the Commission about the Budget. Last week the Financial Times reported that these countries would be told that their budget plans risked breaching budgetary rules.
While in Malta’s case Brussels has simply asked for more details, the Commission is asking Italy why it is planning “non-compliance with the Stability and Growth Pact”, which binds member states to keep their deficit below the threshold of three per cent of GDP.
EU sources had anticipated on Wednesday that the government would be receiving the letter.
However, when asked about the matter, the Finance Ministry said it had no knowledge of the issue.
Yesterday, it confirmed that Brussels had indeed sent a communication asking for further information related on its 2015 draft budget.
The Finance Ministry played down the importance of the letter, arguing that “the procedure is normal practice according to new regulations under the two-pack system introduced for the first time last year”.
The Nationalist Party criticised the government over its contradictory statements which, it said, “shows that Minister Scicluna cannot be trusted”.
In less than 24 hours the government confirmed what it had earlier denied, the party said.
Meanwhile, new Eurostat figures showed Malta’s debt rose by €470 million at the end of June 2014, from 72.2 per cent of GDP to 75 per cent.