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Budget will be frozen if it is not approved

The price of fuel will goback down if the Budget is not approved.

The price of fuel will goback down if the Budget is not approved.

The price of petrol, cigarettes and cement will go down once again next week while civil servants will not receive their wage increases at the start of the new year if the Budget is not approved on Monday.

Excise taxes which came into effect on the day of the Budget must be reversed

This unprecedented scenario will kick in if the Budget is not approved, which now looks highly likely with Nationalist MP Franco Debono openly pledging to vote against it.

According to the Financial Administration and Audit Act and the Revenue (Safeguard) Act, all the Budget measures announced last week will have to be put on hold, while excise taxes which came into effect on the day of the Budget must be reversed.

“According to the law, once the Budget is not approved, all government funds will be technically frozen”, a senior government official told The Times yesterday.

“This means the Government cannot introduce any of the announced measures while increases in excise taxes will have to be reversed to what they used to be before the Budget presentation.”

The law provides for the Government to keep running the country on a caretaker basis until a new Budget is approved, giving a four-month time window in which recurrent public spending can continue.

At the same time, the law makes it clear that no “new money” can be appropriated, meaning that new projects cannot start.

“Technically speaking, while workers in the private sector will still be receiving their cost of living (COLA) increase, civil servants and pensioners will not be getting it as the Government will not be able to issue new funds,” the official explained.

Other Budget measures, such as the increase in children’s allowance, the lowering of income tax and the allowance for the elderly would also have to be put on hold.

The change, however, will not lead to refunds being given for the excise tax paid so far since the proclamation, since they will only cease to exist when the Budget vote is taken in Parliament.

Labour leader Joseph Muscat has pledged to keep all the positive measures and framework of the Budget if this party is elected at the next general election.

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