The government is widening the scope of its pre-budget document to include feedback and comments from the public, Tonio Fenech told Parliament yesterday.

The parliamentary secretary within the Finance Minister said the government would once again be publishing its pre-budget document, however it wanted to include feedback from the public to gauge what their primary concerns are and what people feel should be changed or included in the next budget.

He was opening the debate on the second reading of the Budget Measures Implementation Bill.

Mr Fenech said the budget presented last year was aimed at building on the government’s programme to strengthen the economy and to provide a better future for the country.

He said the government had not introduced any new taxes because the budget was geared towards giving incentives to people to work more and this, in turn, would generate more economic activity.

The parliamentary secretary said the government’s targets were being reached and the figures were even better than the government had estimated.

“2006 was a very good year for the economy. It is recovering and growth was around 2.7 per cent or a bit more last year,” Mr Fenech said.

He said that even though the government had not introduced any new taxes and the price of oil had hit the country hard, government revenue had increased.

“In 2005, revenue from income tax was Lm222m. In 2006, we had estimated this to be around Lm242m. By October 2006, this was revised to Lm250m. However, by the end of the year this figure had increased to Lm256.5m, Lm6.5m more than estimated in the budget,” Mr Fenech said.

He attributed this to two sources of revenue: from employment and from companies’ profits, with the latter showing a Lm6m increase over the estimate for 2006.

Mr Fenech said the government’s decision to widen the tax band had meant more take-home pay for workers. However, even if it meant a loss of Lm12m for the government, in January 2007, incomes from taxation had actually increased by Lm1.2m to Lm8.2m.

“We did not increase taxation just to get the deficit down. We reduced the burden on people to allow the economy to grow,” he said.

Mr Fenech said that up to September, investment had reached a total of Lm487m, adding that even if the sale of Maltacom and the contribution from the financial services sector were removed from the equation, Malta still registered an increase of more than Lm100m over 2005.

However, the Parliamentary Secretary’s positive image of the economy was put under the microscope by the Labour Party's deputy leader Dr Charles Mangion, who insisted that to really understand the local economy one had to examine the figures sector by sector.

Quoting from a presentation given by the governor of the Central Bank last month, Mr Mangion said it was clear from the governor’s analysis and comparisons that the reality was very different from that portrayed by the government.

He asked the government to say whether the increase in government revenue was mainly due to tax arrears being paid now. He said the government was saying that taxation from companies’ profits had increased, however this was mainly due to the banks explosive growth in profits and not because the average company was doing any better.

Dr Mangion also criticised local banks for charging high administration costs on banking transactions and called on the government to look into the matter.

Labour’s deputy leader examined the amounts sector by sector and explained how the government’s analysis was flawed. He also raised the issue of the revised figures published by the NSO and insisted that the Opposition would continue to ask questions. Dr Mangion said some of the data did not make sense and the government had to explain what the situation really is like.

He said the opposition did not believe the government’s claims were sustainable and that it was simply going down a road leading to more taxation.