The Malta Employers' Association has called the 2007 budget "a credible one" that includes a number of measures that would be of benefit to employers and workers.

It said the revision of the income tax bands would serve to increase the disposable incomes of middle-income families and the extension of the 15 per cent tax band would serve as an incentive to employees to work overtime rather than opt for part-time employment which, in many instances, implied a lower marginal tax rate for many employees.

Low-income earners not subject to income tax would benefit from the energy measure, among others, it noted.

The MEA said the changes in national insurance contributions by part timers were an important incentive, particularly for female workers to take up part-time employment. This, combined with the childcare incentives, should have an impact on female participation in the labour force.

The association also welcomed the initiatives related to the environment as well as the increased allocation to address the problems facing the tourism industry.

Given that the country faced substantial constraints to meet the criteria for adopting the euro, and the fact that the economy had for many years suffered from chronic budget deficits that made government finances unsustainable, the 2007 budget, the MEA said, "is a welcome turnaround that should offer mild respite to stimulate economic activity".

The employers also felt that the extensive consultation before the budget, particularly with the social partners, resulted in a package that addressed the needs of different stakeholders.

It is hoping the budget measures will provide more momentum for increased economic growth and that the country will manage to bring the inflation rate down to acceptable levels to facilitate the adoption of the euro in 2008.