One of the most striking things about Budget 2022 is that Covid-19 has not knocked the country off course. The measures announced were just as attractive as in previous years, with many winners. How was it possible to cut taxes and increase spending after suffering the effects of a pandemic? As the Prime Minister said, the answer lies in having a dynamic economy that creates more wealth. We were in a strong position before the pandemic and we are bouncing back strongly.
The Budget is built on solid social values. It rewards hard work and looks after the most vulnerable. It is progressive and futuristic, recognising the importance of a community and leaving nobody behind.
The new 10% income tax rate will make part-time second jobs more rewarding, while annual tax refund cheques will now be for up to €140. There is extra help for low-income families while the extension of free childcare to evenings and weekends will help parents who work long shifts.
A big headline measure was free public transport to all Maltese citizens. This will not only eradicate the daily cost of travelling by bus but help to reduce congestion on the roads and meet our climate change targets. And as we go green, the maximum grant on electric vehicles will increase too, from €9,000 to €12,000, with another 1,200 charging points on the way.
A decent society looks after its elderly citizens. COLA alone would have delivered €1.75 a week more for pensioners but government has decided to go further and make the increase to €5. More pensioners will be taken out of the tax net while anyone over 80 on supplementary allowance will get all their medicines for free.
The investment figures are striking. Next year, government will spend €366m on education. This is 18% more than in 2021 and takes public investment in education to a level nearly two and a half times what it was in 2012.
The figures are even more impressive in health care. In 2022, government will invest €897m in public health. This is 18% more than in 2021 and puts public investment in health at nearly three times what it was in 2012.
Some creative measures can be seen in the area of housing. The financial rewards will be great for people to take dilapidated buildings and turn them into something beautiful. This includes a refund of VAT of up to €54,000 on the first €300,000 spent on renovation works. And there will be no stamp duty or capital gains tax on properties that have been vacant for seven years or more and meet other criteria. First-time buyers will continue to have a tax break and there will be important investment in social housing to make sure everyone has a roof over their head.
There are tax cuts for businesses which re-invest their profits. This will help sustain wealth creation and employment levels.
More green spaces will add to the quality of life. Two of the most impressive projects are a large woodland at Marsascala, with 40,000 indigenous trees to be planted at the Inwadar National Park and transforming the Pace Grasso stadium in Paola into a 12,000 square metre community open space where 165 trees, 2,500 shrubs and 1,500 ornamental plants will be planted.
One way of measuring how well we are doing is to check out what is happening elsewhere. Many countries are experiencing a sharp rise in energy costs. Here, electricity tariffs were cut by 25% nearly seven years ago and have been frozen since. And this Budget goes further, introducing a new system at ARMS, whereby consumers can save unused cheaper units to be used during periods of higher consumption.
Other countries are increasing taxes on income. Malta is cutting them. Some countries charge a wealth tax or annual property tax. Malta has avoided them. Students in higher education elsewhere are facing rising fees. Here, not only are there no fees, but stipends are being increased by 10%. Adding to this, students working up to 25 hours per work shall also be entitled to a stipend.
And when it comes to offering universal free childcare or free public transport, the list of those who can compete with Malta is very small indeed.
In years past, we anticipated Budgets with dread. Under this Labour government every Budget has delivered benefits. Even Covid-19 could not derail the Malta success story.
Alex Muscat is parliamentary secretary for Citizenship and Communities