Mixed reactions to 2006 budget from social partners

Abstract

In October 2005, the Maltese government unveiled its 2006 budget, which addresses a number of key issues and introduces an array of measures. However, it was the government’s pre-budget decision to increase the price of petrol and surcharges on water and electricity bills that took centre stage. The social partners have expressed diverging opinions on the effectiveness of the budget, with the General Workers’ Union particularly vociferous in its criticisms. In his 2006 budget speech in late October 2005, the Prime Minister affirmed that Malta’s GDP grew by 1.7% in the first nine months of 2005, up from 0.2% in 2004, and that growth of 1.1% in 2006 was anticipated. He added that the Nationalist Party government’s strategies to curb the public deficit have proved to be effective, as by the end of 2005 the deficit is due to drop to 3.9% of the GDP. It is envisaged that this downward trend will continue in order to attain the projected 2.8% target by 2006. The budget includes the introduction of the following measures: • a weekly wage increase of MTL 2.25; • the revision of capital gains tax on the sale of property; • new incentives, in the form of tax exemptions and refunds, for the film industry; • tax credits for firms investing in research and development, setting up 'back office' operations and setting up e-businesses in Malta; • better funding for both Malta Enterprise and for marketing and branding tourism; • privatisation of the yacht marinas, Tug Malta, Malta International Airport and Bank of Valletta; • further refunds on the purchase of solar energy products and equipment; and • pricing policy for pharmaceuticals and increased assistance for childcare centres.