Finance Minister Tonio Fenech is to announce an increase in the excise duties on fuel, cement, spirits and cigarettes in the Budget speech this evening.

He will also announce a car scrappage scheme and an increase in VAT on tourist accommodation services.

Other measures include an increase in excise duty on fuel, on spirits and on cigarettes and tobacco products.

The focus of the budget is on job creation, with several schemes aimed at encouraging training and employment.

The details of the car scrappage scheme still have to be announced, but the principle is that people who scrap old cars and buy new ones will be given a refund of just over 15% of the value of a small, new car. The idea being to encourage a phasing out of old cars.

Meanwhile, with immediate effect, excise duty on fuels is to rise by 3 cents per litre. An immediate excise duty of €9 per ton of cement is also being introduced.

VAT on tourist accommodation services, such as hotels, guest houses and self-catering apartments, will rise to 7% from the current 5%. The measure will replace plans for the imposition of a bed tax. The increased VAT will be charged on tourists as well as Maltese people taking a break in hotels in Malta.

The VAT rate will still be lower than in competing destinations.

The tourism sector will next year receive €35 million, an increase of €4 million from this year. A further €3 million will be allocated for the training of tourism managers, and €10 million in schemes to encourage product development.

In his speech, Mr Fenech is due to announce that Malta's economic growth is this year expected to reach 3.5% in real terms, twice what he had projected in last year's Budget, and well above the EU average. Growth next year is projected at 3%.

He said that the government is committing itself to bring down the budget deficit to below 3% by the end of next year - with the gap being bridged by economic growth and more efficiency in the administration.

As a result, he said, all government departments would, by December 15, be required to submit cost reduction proposals.

The government, he said, would launch a drive to collect more arrears of tax.

In the civil service, where possible, for every two retiring employees, only one would be engaged, although this would not apply for key sectors such as health and education.

The government will also review its procurement procedures with a view to achieving savings. It will also review its transport needs, so that where possible it would trim the number of cars and drivers as well as the fuel used.

Random auditing will be made of people who receive government assistance, including those in receipt of medicines, to ensure that no abuse is made.

Among the training incentives, people on the minimum wage will be offered €25 weekly if they start a training course with the ETC.

Mothers who return to work will continue to benefit fro a one-year tax holiday while part-time self-employed women would be charged tax at 15% instead of paying National Insurance on their work.

When women have to go to work because their husband is incapacitated, their husband would not lose his incapacity pension.

A new government unit will investigate reports of exploitation of workers by companies working on governemnt contracts. Should any abuses be found, the contracts will be terminated.

The micro-invest scheme, which features tax refunds for SMEs, will be extended, while the micro-credit scheme will be brought into force.

Small businesses will also benefit from tax refunds of up to €10,000 on investment made to make their processes more efficient.

The government will embark on new factory building at Hal Far, Corradino and Bulebel as well as SME parks in Corradino and in Gozo.

People with a turnover of under €7,000 would no longer be required to register for VAT (and issue VAT receipts), thus also reducing government administration costs. Furthermore those who pay their due VAT online will have their deadline extended by seven days.

The Budget features an allocation of €41 million for the rebuilding of arterial roads, notably the road leading to Cirkewwa, the Marsa-Luqa road and the road to Menqa in Marsa, as well as the Xewkija-Victoria road.

€15 million will be spent on residential roads.

The Budget also features incentives to encourage people to buy electric cars , including a steep reduction in the registration fee and subsidies of €5,000 for those who opt for recharging equipment that uses renewable sources of energy.

A new subsidy scheme for the purchase of solar heaters will be introduced. The scheme will feature refunds of up to €400 on the cost of each unit and will be available to anyone (A more generous scheme launched last year applied only to Gozo residents and others with a low income).

In other points, the Budget features a €200 increase in the tax rebates given to parents who send their children to private schools.

Owners of classic cars will be able to group their cars under one licence, and a tax refund for those who buy bicycles will be reintroduced.

Students in forms one, two and three will every year be given a voucher of €15 for use in cultural activities.

The Budget features a €1.16 weekly cost of living increase and increases in the threshold of a number of social benefits so that beneficiaries would not lose eligibility once the cost of living increase kicks in.

There are also increases for those on a services pension.

The registration charge for those who buy a vehicle with wheelchair access will be waived.

Farmers will also see their social security contribution reduced.

See stories on the Budget measures in the Budget section above.