The concept of tapering unemployment benefits is to be expanded in the forthcoming budget to make work pay, Finance Minister Edward Scicluna said this morning.

Introduced in the last budget, the principle works on the premise that rather than losing the unemployment benefits immediately as soon as one found a job, the benefits are phased out over a number of years.

Addressing a conference on VAT organised by the Malta Institute of Management Prof. Scicluna remarked that Malta had the lowest tax wedge on labour in the EU.

The Finance Minister noted that the in the last two years there was a shift from direct to indirect taxation which was the secret for the creation of jobs.

Prof. Scicluna reiterated that the main aim of the forthcoming budget was to reduce the number of people who were dependent on social services.

He also announced that the merger between the VAT Department and the Inland Revenue Department would be carried out by the end of the year.

Since this had been taking too long, the government sought the advice of the IMF on how it could be carried out, the minister said.

Prof. Scicluna he was not satisfied with the method used to draw up the budget saying that this should be spread over an entire year.