Finance Minister Edward Scicluna will present the Budget for 2015 on November 17. It is a good opportunity to look back to see whether the last one achieved its targets and what should be in the next.

Malcolm Booker

Chief ­executive officer – Deloitte

Here at Deloitte, we are in a good position to get feedback from a spectrum of clients and we have been receiving some clear messages over the past few months.

The World Bank report on the ease of doing business showed that Malta is still lagging in 94th place – and it had the lowest ranking of the EU member states. This is a very big issue as FDI is obviously very important.

Last year, the minister indicated that the government wished to cut down on red tape. More has to be done if we are to make Malta more competitive, to make it easier to do business.

We hear this often, particularly from our foreign clients, who complain that moving here is never as easy at they were promised it would be.

Opening a bank account is a major, major issue. I understand that the banks are very cautious as they do not want to attract the wrong business, but the reality is that it sometimes takes months for companies – and their employees – to open a bank account.

When it comes to finances, I think the government is doing a good job of keeping things under control. A contentious issue, in my personal view, is free healthcare which takes up a considerable chunk of public finances. It needs to be looked at once and for all. I think there should be means testing for the use of health facilities. I know this is very delicate politically and that governments hate to do this because it loses them votes – but from a neutral, economic point of view, it is something that needs to be looked at.

We also need to be aware of the importance of credit ratings as this is something that foreigners look at. Moody’s A3 rating, for example, was very good and the fact that we have a stable to good outlook is also very positive.

It is obvious that there has been a lot of government debt off balance sheet, as well as Enemalta debt covered by government guarantees. The quicker we conclude the Enemalta deal with the Chinese, the quicker we can get clarity on exactly how the numbers are going to change. And the quicker we do that, the better.

Students will always have their own preference but if they had the right information, they might take different decisions

However, we should not only be looking at attracting foreign investment. We should also be looking at the number of Maltese individuals and companies ­looking to invest overseas. On the whole, they do it with their own resources but there could be more government incentives to help.

We also see a great labour force mismatch with graduates coming out of university finding it difficult to find work while, on the other hand, financial services and accountancy firms cannot find enough people. Counsellors should guide students as to which career path to take – but they themselves need to be informed.

They should be speaking to people like us much more as we are in a position to tell them what is happening, and not just today but over the next three-four years. Students will always have their own preference but if they had the right information, they might take different decisions.

With regards to pensions, I am not sure that the tax incentive – capped at €150 – for third pillar pensions is going to make a difference. For it to work, you really need to incentivise people to save. And second pillar – occupational – pensions also need to be looked at. It is all still too much of a political game.

Indirect taxation has been mentioned as being in the next Budget. I am curious to see what they are going to do as this tends to affect those of lower income disproportionately. Perhaps we should be looking at more environmental taxation.

Mark Bamber

Partner, advisory services – KPMG

A number of positive trends emerge from the pre-Budget document’s economic analysis. With a GDP growth rate of 2.9 per cent in the past year, we are growing faster than the EU average and getting closer to the cohesion target.

The government has done very well, in my view, to reduce the deficit to below the 3 per cent threshold and the downward trend is very healthy.

Inflation at 1 per cent is extremely low which raises the risk of deflation. If it keeps going down, what are the implications for postponement of consumption, for people on fixed incomes?

Employment is growing and unemployment is stable at 6.5 per cent. This is a very important statistic and an important indicator of economic activity. A certain level of unemployment is important to have but at the same time, ­excessive unemployment leads to all sorts of problems, both economic and social.

We also need to look at connectivity – in a very broad sense

When it comes to competitiveness, an investor looking at setting up shop here will look at what it will cost and at what productivity is like, to know the input cost of his operation.

Unit labour costs are competitive, compared with the north of Europe. Maltese salaries compared to those in Western Europe are competitive but also compared to those in Eastern Europe when you factor in perceptions of productivity. A number of overseas investors are very positively impressed by the productivity of Malta-based operations.

However, according to the pre-Budget analysis, productivity has slipped since last year. A small slip is not necessarily ­problematic in itself but if it denotes the start of a trend, we need to understand why this is ­happening.

I see the country as being on the verge of a new impetus of investment in the infrastructure. We have developments in the energy sector – a new power station and investment in generation, with a 10 per cent target of electricity from renewable and the switch to cleaner gas.

However, we also need to look at connectivity – in a very broad sense. Are our traditional linkages to the rest of the world the right ones for today?

Is our connectivity to the rest of Europe the right one? With the exception of London, it is tremendously difficult to fly out of Malta to have a business meeting and to return on the same day.

The other part of connectivity is internal connectivity, getting from point A to B in traffic. One of the reasons we have such big traffic problems at the moment is the significant number of roadworks. Traffic is a tremendous problem: there are real costs to traffic jams. There is the cost of getting to work late, that deliveries are late, that people are tied up in their cars, that more petrol is used, that time is not spent more productively elsewhere. There are also health issues and environ­mental ­issues.

Robert Attard

Partner, tax policy leader Central & South East ­Europe – EY (Malta)

From a personal tax point of view, the next Budget Act could well be the most important Budget Act of the past 50 years.

The Civil Unions Act provides that a civil union, once registered, shall have the corresponding effects and consequences in law of civil marriage but, from a tax point of view, the full implementation of the aims of the Civil Union Acts requires an overhaul of our tax laws. Necessary changes to our tax law are expected in the Budget Act. Presumably, new definitions will be introduced. I cannot see how a computational regime based solely on marital status can be retained. The will of Civil Unions law is crystal clear. A civil union must have corresponding effects to marriage which suggests that definitions of ‘married couple’ and ‘married individual’ should vanish. The current version of the Income Tax Act provides for a capital gains tax exemption for transfers made by persons to their spouses and the latter’s descendants and ascendants. Clearly, the remit of the exemption should be extended to include transfers made by persons to their partners in a civil union. The most popular capital gains exemption in the Income Tax Act does not equate married couples to partners in a civil union. The exemption applies to the principal residence owned by the taxpayer or ‘his spouse’. The reference to ‘spouse’ clearly breaches the value of equation and the exemption should refer both to spouses and to partners in a civil union.

The most unpopular capital gains exemption in the Income Tax Act is undoubtedly the exemption which applies in the context of a transfer of assets between spouses as a result either of a separation, a divorce or dissolution of the community. The Civil Unions law provides that the sections of our Civil Code dealing with these ­unpleasantries should apply to civil unions too. Clearly, this exemption should be extended to provide for dissolutions of civil unions.

Last year’s Budget amendments introduced a new property transfers tax exemption applicable to the transfer of property made in the context of a liquidation. As it stands, the exemption applies to transfers made to an individual or his spouse who owns no less than 95 per cent of the company’s share capital. Clearly, references to a ‘spouse’ should be replaced by references to transfers made by a person to his spouse and transfers made by a person to his partner in a civil union. The current version of the Income Tax Act provides for a tax exemption on financial assistance paid for the maintenance of a child and a tax deduction on alimony payments paid to an estranged spouse. Since the Civil Unions Bill equates civil unions to marriages, tax law needs to provide for the tax treatment of payments made pursuant to a breakdown of the civil union. References to ‘estranged spouses’ should be substituted by a neutral term.

Computational rules pose a challenge. Our computational system for individuals is based on their tax status. A person’s married or single status determines their tax liability. For income tax purposes, spouses report their income in a particular way. The law provides for joint computations and a joint tax return. Will this joint tax return system apply to partners in a civil union ushering in major administrative changes? By being treated like spouses, some partners in a civil union could end up paying more tax than they are doing. Will the 2015 Budget Act abolish the joint tax return and have all taxpayers file their returns separately?