The Budget announced in a two-hour speech by the Finance Minister this evening, predictably, brought a mixed reaction.

Labour leader Joseph Muscat said this Budget would not put money in the people’s pockets but would actually erode purchasing power.

He said that the Prime Minister had promised to reduce income tax as of the first Budget of this legislature, but three Budgets on, this promise had not been kept, and the people had therefore been denied a total of €141 million, or €200 per family per year.

Instead of easing the people’s burdens, this budget imposed new burdens such as the increase in the duties on fuel.

Dr Muscat also hit out at the increased VAT on collective accommodation, saying this could undermine tourism’s competitiveness and endangered the jobs of the 40,000 people who worked in the tourism sector.

The Malta Hotels and Restaurants Association said it was shocked by the announcement that VAT on hotel and other tourist accommodation would be raised to 7% from 5%.

MHRA president George Micallef said the association was never consulted about this, and he feared it would have a sharp impact on hoteliers, since they had already signed contracts for next year. (see video)

GWU General Secretary Tony Zarb said the Budget did not ease the financial burdens which had been imposed on households by the government. Union proposals to ease that burden had been ignored, he complained.

UHM General Secretary Gejtu Vella also said that burdens had not been eased. This, however, was a responsible budget, given the financial climate. He noted that abroad, workers were losing their jobs or their working conditions. Mr Vella said several proposals made by the UHM had been taken on board.

Joe Farrugia, Director General of the Malta Employers’ Association, said this was a balanced if unspectacular Budget. He welcomed the new scheme offering an allowance to minimum wage earners who opt to follow training offered by the ETC. He also welcomed the linkage between education and industry in the innovation sector.

The GRTU said the government’s economic strategy was correct and the government was right to aim at reducing the deficit.

Director-General Vince Farrugia said this was a two-faced budget which smiled about the economy but frowned where it came to measures to further improve the same economy.