The Budget presented on Monday 9^thNovember 2009 centred around the Government’s strategy to respond to the challenges presented by the global economic crisis, while remaining focused on the implementation of Government’s Vision 2015. Among the budget’s aims are the strengthening of fiscal and economic stability and market competition, the giving of incentives for investment inproductivity, investment in health, social welfare, education and training, infrastructure, environment, roads, historical and cultural heritage, viable economic sectors and the implementation of Government’s Vision for Gozo as an ecological island. Government announced that financial estimates for 2010 have remained at the same level as this year in order to continue with its process of fiscal consolidation.        

The Finance Ministerannounced that, as a result of the impact of the prevailing global economic downturn,the Maltese economy is expected to decrease by 2%, with the GDP for 2009 expected to fluctuate by 2% and the rate of inflation reaching 2.5%.  The public debt for 2009 is calculated at 217.6 million euro, or 3.79% of the GDP.  

While no provisionwas made for the revision of income tax, Government announced that it would be introducing a number of measures aimed at curbing Government’s expenditure as well as others to strengthen the enforcement of fiscal legislation, in order to reach this budget’s aims without the need to introduce additional taxes.

Government also announced:

.        The removal of levies imposed on credit cards amounting to €16.31

.        Reductions of tariffs for the registration and licensing of high powered boats.

.        It will be extending up to 2011, the option allowed to vendors who sell their property within 5 years from acquisition, to pay either a 12% final withholding tax or a capital gains - a measure felt necessary to boost the local property market, which was amongst the worst local areas hit by the global recession.

 

Government announced that it will be introducing a number of both fiscal and non-fiscal incentives to assist small enterprises and self employed persons. These include:

.        An allocation of €10 million (which may be extended) to be given as a Micro-credit to those self-employed persons and small enterprises in orderf or these to have the necessary liquidity for their investment. This credit will be subject to favourable interest rates.

.        A 40% tax credit which will be capped up to a maximum of €25,000 will be given to those self-employed or other small enterprises which employ up to a maximum of 10 persons and to sole traders who in the next 2 years refurbish their shop, invest in new machinery and technology, create new jobs among other listed investments. This tax credit will be raised to 60% for those traders who perform these investments in Gozo.

.        Incentives for enterprises which undergo expenses to increase the accessibility of the place of work to new employees with a disability.

Government has always considered work to be the basis of economic and social progress. To this end it has announced a number of schemes and incentives which are intended to assist those who would like to work. These are to take place through the allocation of €3.3 million to the Employment and Training Corporation in order to promote new incentives which include:

• A new scheme, to be known as the Work Trial Scheme, which will seek to integrate unemployed persons for a 12 week period to enable them to gain work experience.
• Set up a new job centre for youths in Birkirkara
• Assist mothers who wish to undergo a training programme by contributing financially for their child care.

In order to further promote job creation, Government announced that current tax benefits which apply to parents who send their children (aged up to three years) to a child care centre will be extended to cases where childrenare over three years old and also when they are sent to child care centres during the summer months.

As from next year, the Government will be giving an incentive to those employers who undergo expenses in order to create a child care service fortheir employees at the place of work.

Government has emphasised its determination to combat tax evasion and all other forms of fiscal crimes including contraband which negatively affect the Government’s income. In order to achieve this aim, the Government will be:

• Initiating a process so that all fiscal departments, including the Inland Revenue, VAT and Customs Departments will be amalgamated into one entity so that the information which is gathered by all fiscal departments may be utilised by the different sections of the new entity.
• As from 1 June 2010 no VAT or income tax refunds will be paid unless both the VAT return and Income Tax return are duly filed.
• Addressing the current trends in tax planning which result in severe loss of revenue, by revising our tax laws in order to rectify any loop holes or other uncertainties which presently exist.
• Developing a Taxpayer’s Charter which should help the public understand its rights as a tax player and the service which it is to pretend.

For the coming year Government will be once again supporting the use of alternative energy in homes through the allocation of funds for photo voltaic schemes and solar water heaters. 

 

Malta is still totally dependent on oil for its energy production and water treatment. With the price of oil on the increase, the long feared reform on water and electricity tariffs was confirmed. The Government however intends to allocate € 10M in aid to those 97 % of families who consume not more than10,000 units, before the new tariffs come into force.

The Government announced the creation of a special fund intended toidentify and use untapped sources of revenue, so as to reduce its dependency ondirect and indirect taxation.

 

In addition to the reform of public transport, Government aims to review registration taxes,and vehicle licenses by adopting EU benchmarks that reward eco-friendly vehicles, whilst more polluting vehicles will be charged more.

 

Funds areto be directed to address the waiting lists problems at local hospitals, the provision of new medicines, the settlement of outstanding payment to its medical suppliers, cancer treatments, mental health and the elderly.

Further investment in education and sports, as well as various fiscal measures aims at benefitting arts and culture, with aparticular focus on film making.

A weekly €5.82 increase in wages was announced to compensate for the increased cost of living.