The budget for next year, read out in Parliament yesterday by Minister Tonio Fenech chooses to push public investment in the country’s economy as against keeping to the strict timetable on the way to a balanced budget by 2010.
Read out in a strident and hectoring voice by Mr Fenech, the government’s plan for next year contained much that was already known and few surprises.
Predictably, the concern of these past days regarding the water and electricity charges did not really feature in the speech, except tangentially.
The government’s plan, Mr Fenech began by saying, can be encapsuled in three words: responsibility, sustainability and solidarity.
Three high-sounding words which do not really describe the details announced yesterday.
The government will be making capital investment to the tune of:
• e322m in infrastructural works
• e112m in environmental investment
• e362m in education and training
• e30m on alternative energy programmes
• e64m in aids to industry, including tourism.
Energy
The budget speech then proceeded in a way that did not follow the list above. For convenience sake, and since most people would be interested to know about the government’s proposals regarding the energy sector, we will treat this first.
As promised in the PN electoral manifesto, the government will be providing vouchers to every family that can be exchanged for energy saving bulbs at local shops.
Up to two-thirds of the cost of solar water heaters, to a maximum of e460 will be paid by the government, but only to the first 4,500 families that apply.
Government will also pay 50% of investment in photovoltaic cells to a maximum of e3,000 for the first 200 families.
Another scheme helps pay for roof insulation, and double glazing of the first 1,000 families that apply.
There are parallel schemes for industry.
A wind farm will be built at Sikka l-Bajda costing e130m while a new power station will be built at Delimara, thus leading to the closure of the inefficient Marsa power station.
The downside to all this is what has been called an Energy Fund which will lead to the immediate increase of e0.03 for every litre of petrol and e0.02 for every litre of diesel.
Apart from the ongoing environmental work at Sant’Antnin, Maghtab and the drainage treatment plant at Xghajra, the government has announced a war against plastic bags, each of which will now carry a levy of e0.15, plus a similar levy on magazines carried by newspapers or posted in letter boxes, an increased levy on non-energy efficient bulbs and neon tubes and an increase in the licences for swimming pools.
Concurrently, the government will be announcing a complete changeover of public transport with different sizes of buses, new routes, better bus stops and liberalization of the unscheduled bus service. The public bus service in Gozo will be completely overhauled.
Car registration tax
The next issue the public at large will most probably be interested in is the change in the car registration tax. The main points of this have already been made public over the past days.
The first phase of the reform will focus on private cars with commercial vehicles being tackled later. The smaller cars will see a reduction of 44% of taxes, the middle-sized cars get a 25% reduction while the bigger cars will pay more.
The car licence will increase with the age of the car, and the licence for commercial vehicles will go up to e185.
Income Tax revision
The government’s electoral manifesto had spoken of a complete change of the income tax regime with taxes being cut to the tune of some 10%. Lately, the government has been giving strong signals that the international situation counseled caution. As a result, most did not expect the government to give out any tax reduction.
But the government did so, although in a much reduced manner. This will leave some e12m in taxpayers’ hands. The government pointed out, however, that the cumulative impact of tax cuts over the past three years will have seen some e152m being kept by the people as against going into the government coffers.
As regards other taxes, the government very surprisingly cut excise duties on spirits. Speaking to the media just before going to the House of Representatives to read out his speech, Mr Fenech said that the high excise duties on spirits had led to a situation where most spirits were being brought in from Sicily, where the duty is far lower. The reduction of excise duties is thus an attempt to try and bring some order into this sector. Meanwhile alcopops and similar drinks see a higher tax. The legal age for the consumption of alcohol is being raised from 16 to 17 years.
Cigarettes are also being hiked by e0.20 per packet.
Aid to industries
Earlier, Mr Fenech announced more incentives to help industry through five schemes costing e20m, the doubling of the Kordin Business Incubation Centre, a new BioTechnology Park costing e15m in San Gwann, more upgrading of industrial areas and the development of two SME parks.
As regards tourism, MTA has been granted e26m plus a further e2m due to the particular circumstances of the sector.
Host families see their untaxed ceiling raised to e3,500.
The downside is that as from 2010 each tourist will ‘contribute’ e0.50 for every night he spends in a hotel or other accommodation.
Education
• e13m to build or modernize more schools.
• e51.9m for the university
• e13.3m for MCAST.
Government projects
• e100m over the coming five years for the Marsascala ByPass, Valletta Road in Zurrieq, Council of Europe and Garibaldi roads in Luqa, the Coast Road, December 13 Road underpass to Valletta Waterfront, Ghadira ByPass to Cirkewwa and the continuation of the Mgarr to Rabat road in Gozo.
• Embellishment work in Ghadira, Golden Bay, Ramla l-Hamra, Sliema and Qawra.
• The restoration of bastions will continue – e36m over seven years.
• Grand Harbour regeneration: the Menqa area, a Heritage Park at the Upper Barrakka, maritime studies on cruise liner quays, on the Marsamxett breakwater, the yacht marina in Kalkara and at Sa Maison, and at Boiler Wharf where cruise liners may berth as from next year.
• A new sports complex in the North.