Maltachamber.org.mt will be providing members and visitors to this business portal with constant updates and live reactions to the Budget 2018 speech as it is read out by Finance Minister Edward Scicluna on Monday evening.
The detailed coverage of the Budget speech follows the Chamber’s tradition of providing its members, as well as members of the wider public, with reliable and accurate reporting on Budget day.
The Budget is expected to start at 18:30.
Below are the minute-by-minute updates and preliminary reactions.
20:30 Finance Minister concluded his speech.
20:20 Health. A new 350-bed hospital to be built in Gozo. 300 medical student placements in the Barts Medical School.
20:14 Exemption on income tax of one year for Masters students, and two years for PhD students, who eventually start working in Malta.
20:13 Roll-out of tablets for Year 5 students to start this year.
20:11 Abolition of Matsec fees and the building of four new schools in Marsascala, Qawra, Msida and Victoria, Gozo.
20:10 Multi-sensory rooms to be introduced in schools for students suffering from autism .
20:06 Offsetting of payments Government will, where possible, introduce an offset system between payments owed to Government and payments due to private operators.
Comment by the Malta Chamber: The Chamber welcomes this development. We have been calling for the initiative to be implemented during the last decade.
Online Social Security forms and VAT returns. The facility to submit online social security forms and VAT returns will be extended to companies employing less than 10 employees
20:02 Citizenship Scheme (IIP) Government will extend the programme to attract further investment
Further investment in Gozo. Government will allocate funds for Gozitan entrepreneurs that operate in the Tourism sector. A new research and ICT Hub will be established at the Xewkija Industrial area.
19:59 Pharmaceutical Sector. New training initiatives on regulatory affairs of the sector. The Medicines Authority through dialogue with the industry will work to reduce the price of medicines.
Comment from the Malta Chamber: It is positive that the Authority is taking the initiative to help the local pharmaceutical industry to strengthen its competence in regulatory affairs. This is yet another example of the way the local pharmaceutical industry and the regulatory authority continue to work hand in hand to strengthen the local competences of the industry in bringing more medicines to the market. This will engender more market competition, that is the driving force in encouraging greater accessibility of medicines. Consequently, it is important that steps taken to comply with other European Union legislation that will come into force in the near future do not undermine this process.
Comment from the Malta Chamber: The Manufacturing segment remains an important sector of the economy. It was noted that no specific measures relate to this Industry. In the context of enhanced competitiveness, it is felt that this Budget does not address the challenges of this segment
19:53 Remote Gaming Next year a new regulatory framework will be launched to provide further incentives for growth in the sector. This project will also include the introduction of the VAT grouping concept for financial services and remote gaming.
Tourism. Cruise liners - In view of the number of tourist arrivals at the Valletta Cruise Port action will be taken to reorganise vehicular access to the area and general upkeep of the waterfront area. Government committed to restructure Air Malta.
Comment from the Malta Chamber: It seems that although Tourism is acknowledged as an important sector, nonetheless, the Chamber expected more on: Improvement of tourism zones, not just Waterfront, with emphasis on cleanliness and general greening of the environment; mitigating measures to limit negative impact on tourism of construction; to lessen administrative burden on work and study visas; increased enforcement on travel operators; Whilst we appreciate that the Government is committed to restructuring AirMalta and returning it to profit, details of this plan are unknown and cause a slight concern to travel operators to book advanced bookings.
Comment from the Malta Chamber: Despite positive financial results for Enemalta and the economy in general, the Malta Chamber is disappointed to note that Malta shall remain the only European country in which domestic energy rates are cheaper than commercial energy rates, while commercial energy rates remain over 40% higher than the EU average.
19:50 BREXIT Government to actively work on attracting investment from the UK. For this reason, a working group was established to draft a strategy to attract investment in the aviation, maritime and electronic payments segments.
The Malta Chamber looks forward to actively participate in this working group through its representative.
Strategy on Blockchain technology. A taskforce entrusted to evaluate the implementation of a national blockchain strategy was established. Training initiatives for public sector employees in this sector. Government to launch a web-portal to serve a networking tool for those interested in blockchain and cryptocurrencies.
The Chamber welcomes these new developments
19:47 In line with EU objectives Government will continue to promote Renewable Energy and responsible use of energy sources. It will also implement water conservation in the domestic sector through various schemes. Government will sustain its work in the energy sector based on the principles of security of supply and affordable energy for everyone. Water infrastructure will remain the focus for 2018. Better use will be made of treated water to decrease pressure on the water table. Following on the success of the first communal solar farm, two other farms will be commissioned on water reservoirs belonging to the WSC.
A new desalination plant will be built in Hondoq ir-Rummien, Gozo. A national campaign for the efficient use of water resources will be launched to educate consumers on the efficient use of water. Technological monitoring of the aquifer will be introduced to ensure better use of underground water.
19:46 A tree will be planted for every boy and girl born in Malta.
Comment from the Malta Chamber: While wholly in favour of initiatives with an environmental aim, the Chamber has raised its concerns on a potential glass and plastic bottle deposit and refund scheme on numerous occasions and for numerous reasons. Firstly, the recycled waste collected door to door consists largely of plastic bottles, meaning that such a scheme threatens the continued feasibility of the collection system. Secondly, consumers will face higher beverage prices as any additional costs on beverage producers to operate the scheme will eventually be transferred to the consumer. Thirdly, in order to operate successfully, the scheme relies on all retailers, especially supermarkets, to allocate the necessary space to operate the scheme. Today, retail space comes at a very high premium, meaning there may be little willingness to do so. Prior to implementation of the system, the Chamber expects nothing less than constant consultation with all stakeholders in order to ensure smooth implementation and avoid costly oversights.
19:42 The environment remains the biggest challenge the country faces. Government will institute reforms and substantial investment to address this sector. Government will invest €150 million to implement an infrastructural project to turn waste into energy. Government will start discussion with the private sector to operate a deposit scheme for plastic and glass beverage containers. Ambjent Malta will be set up to focus on the management of Natura 2000 sites. This will also strengthen enforcement measures to ensure greater discipline and a cleaner country.
Comment from the Malta Chamber: The Chamber noted that its calls for government not to introduce any surprise measures and new taxes were largely heeded. This is to the advantage of business momentum. The main new measure announced this year in this regard, relates to the introduction of a deposit and refund system on plastic and glass beverage bottles. The Chamber looks forward to the opening of formal consultations with the authorities to ensure that the objectives of this environmentally-friendly measure will be achieved through fair and equitable implementation on all direct operators whilst ascertaining the sustainability of existing waste management schemes.
19:37 Efforts to further promote car-pooling besides the current preferential use of bus lanes. Further incentives for the purchasing of bicycles, electrical bicycles and scooters such as grants and exemptions from VAT. Grants for Local Councils and firms investing bicycle racks. Incentives for electric and hybrid vehicles through grants and exemptions from registration tax.
19:35 Public transport will be further improved by facilitating transport between different models such as improvements in ferry terminals. Bus stops will be made more accessible and improved bus shelters will be installed. Free transport for 16-20 year olds. Free transport for independent and church school students from the scholastic year 2018-2019.
19:33 Economic success and large number of foreign workers putting transport system under pressure. Plans to improve road network will ease congestion but will not solve problems. Advanced countries encourage walking, use of bicycles and motorcycles together with public transport while actively discouraging use of private cars. Malta will follow this direction also to address the air pollution problem. An agency will be set up to plan and implement the €700 million investment in the road network. It will be made up of architects, engineers and other professionals so as to have the expertise needed to take forward these plans.
Comment from the Malta Chamber: From initial review of the financial position and projections it appears that the Government’s room for manoeuvre is understandably restricted. Indeed the overall position of the consolidated fund will remain negative in 2017 and 2018 with marginal gains in 2019 and 2020. However, the overall deficit in the consolidated fund is expected to remain in the region of 100m over the period. This may be interpreted that Government is reinjecting the additional resources raised from taxation back into the economy in the process boosting personal and company incomes.
In this context, the specific measures aimed at supporting the income base of various categories of individuals households and firms are supposedly meant to target various needs that arise in society. The ultimate effect will depend on the particular financial position of the intended recipients.
19:28 Reduced stamp duty scheme for property bought in Gozo to be extended by another year. To introduce schemes known as Equity Release Facilities to help pensioners who are owners of their own home, by way of increasing their financial income. A scheme to redeem emphyteutic lease will be launched soon
19:27 Refund of work expenses to persons who buy property in Urban Conservation Areas or scheduled property. Stamp duty scheme reduction from 5% to 2.5% for property in Urban Conservation Areas will be extended by 1 year.
19:25 The First Time Buyer Scheme of exemption from stamp duty on the first €150K will be extended for another year. Exemption from stamp duty will also apply to second-time buyers of up to €3000K. In case of owners with disability, the maximum amount goes up to €5000K.
19:24 Government to publish White Paper for consultation on affordable rental market for social housing.
19:21 Installation of lifts in Government residential blocks will amount to €16 million. Housing Authority to continue with its programme of repair and maintenance for particular blocks
19:20 Social loans provided for up to 100 prospective home owners. This will be extended to another 300 prospective owners.
19:18 Reduction in pension retention of 20% due from elderly people who reside in Government property and intend to move to St. Vincent de Paule or other homes for the elderly, to release their property in favour of Government.
19:17 Extension of ‘Renting to Assist’ Scheme to increase stock of social housing. To launch a scheme, for the first 100 units that apply, offering financial support of up to €25K on each residence for repair and maintenance work on vacant or dilapidated property. Owners of such property would be bound to rent the property for social housing after 6 months from approval of funds.
19:16 In 2017, Government embarked on an investment of around €50 million to construct around 700 units in housing. Other measures which were introduced to support those who rent or those who want to become owners of their own residence. In last budget a new scheme was introduced to double the rental subsidy for those who enter into a legal contract. In 2017, widened qualifying subsidy thresholds. To extend thresholds even further so that more rental properties will benefit. Special thresholds to 65+ to benefit for rent subsidy. Housing Authority to publish criteria.
19:14 State to invest in adequate infrastructure to house socially vulnerable people. The State to launch initiatives to incentivise the private sector to support the social housing situation.
19:07 Active Labour Market Policies ‘Making Work Pay’ scheme shall be reinforced and extended. ‘In-work benefit’ to be extended. Families with one parent working shall receive a maximum of €450 while families with two working parents shall receive a maximum of €1,200. ‘Tapering of social benefits’ scheme to be strengthened by reducing eligibility criteria of 2 years living on social benefits to 1 year. This ensure a more rapid transition from dependence on social benefits to earning a living through work.
Comment from the Malta Chamber: The Malta Chamber is wholly in favour of such active labour market policies and acknowledges the role such policies have played in increasing labour market participation rates and subsequent economic growth.
19:03 VAT exempt threshold for micro enterprises increase from €14,000 to €20,000.
Combatting Tax Evasion Fines associated with tax evasion shall increase in order to combat tax evasion. The Joint Enforcement Task Force shall increase its efforts to identify companies engaged in tax evasion.
Comment from the Malta Chamber: It must be a priority to rectify structural issues that significantly impact the state of public finances through continued consolidation and elimination of abuse, leakages and overspending such as in social benefits and state pensions, public sector employment, the myriad of undeclared economic activity and abuse in free movement of goods amongst others. Such issues can easily be curtailed through more effective monitoring and enforcement and through implementation of a number of proposals put forward by the Malta Chamber in its pre-budget document.
18:59 Tax decreases for workers. A one-time payment to all workers earning under €60,000, both full-time and part-time. Maximum of €68 and minimum of €40 payment, depending on gross income from employment of the previous year.
Pensions. Increase to both contributory and non-contributory pensions of €2 per week. Maximum non-taxable pension income increased by €200, to €13,200. A €200 increase in service pensions. A €300 donation per year to each elderly person above 75 years of age still living in their homes.
Comment from the Malta Chamber: In light of the threat that the current state pension system poses to the sustainability of public finances in the long-term, the Malta Chamber has consistently declared it is of measures that improve sustainability. Besides, the Chamber has encouraged the country to implement voluntary second pillar pensions and incentives for employers and employees to enroll in such a system for many years as this would greatly dampen the over-reliance on state pensions.
18:56 Additional day of leave: Implementation of the promise to reimburse workers for public holidays falling on a weekend will be shall commence through introduction of an additional day of leave for all workers in 2018. Discussions to further implementation of this measure throughout the legislature are ongoing and aim to reach consensus between all social partners.
Minimum Wage. As agreed between all social partners at MCESD level, workers earning minimum wage shall be entitled to a EUR 3 increase per week in the 2nd year of employment and an additional EUR 3 per week in the 3rd year of employment with the same employer.
Workers earning slightly above the minimum wage shall also benefit pro rata in their 2nd and 3 year of employment with the same employer.
18:55 COLA : The cost of living adjustment (COLA) will be €1.75 per week. This figure considers the downward adjustment announced last year.
18:53 Minister for Finance just announced that he is proud to be announcing a post-electoral budget which is not introducing any new taxes, to the loud approval of the Government benches.
18:45 Hon Scicluna is providing a background to the budget which is being delivered within the context of a general budget surplus.
18:38 Mr Speaker has read out a message from the President of the Republic as is customary, authorising Parliament to begin discussing next year's Budget. Finance Minister started reading his speech which promises to be characterised by the favourable economic performance of the country in recent years.
18:17 Parliamentary Questions currently under way.
17:55 The Hon Prof. Edward Scicluna Minister for Finance has just arrived at the Parliament building, after visiting H.E. the President of Malta. He is expected to start reading his sixth Budget speech at 18:30.