The Chamber of Small and Medium Enterprises (GRTU) yesterday described Budget 2008 as “a cautious one”. The government could have been bolder as it “definitely is not an election budget”.
In comments to the press GRTU director general Vince Farrugia explained that the GRTU examined the budget in the light of the proposals they had made and in terms of the country’s economic growth.
“There was a lot of hype about this year’s budget – it was very different because it seemed as though the government was very interested in knowing what the public wanted,” he said.
After the government found out what the public wanted then it incorporated it within what was best for the country’s economic growth, added Mr Farrugia.
“The philosophy behind this budget, and the previous budgets, is wrong as middle class employees are affected heavily by the income tax,” he said.
“The average household has been very heavily taxed for a number of years and till now suffered a deficit of between Lm3 (EUR6.99) and Lm3.50 (EUR8.15) a week,” he said.
Mr Farrugia said that, in this budget, the GRTU wanted more fiscal incentives, especially for the housing sector.
“There is a drop in sales for first-time buyers caused by the lack of disposable income and the high market prices,” he said.
He pointed out that the tax compliant unit seemed to have started a crusade against self-employed persons.
Mr Farrugia said that that the GRTU was seriously worried about the measures introduced for the country’s economic growth.
“If one looks at this year’s figures one notes that the rate of exports, imports and the Gross Fixed Capital Information – the capital investment in the country – have decreased when compared to last year,” he said.
However, Mr Farrugia said that this could be due to the construction of the Mater Dei hospital.
The qualified labour force of the country was the worst affected, he said.
Mr Farrugia pointed out that after the tax bands were widened in last year’s budget, the government received Lm32 million (EUR 74 million) in income tax.
“However, public expenditure for certain projects kept on increasing – very bad management,” he said.
Government projects all have a set budget, just like private projects, and the government should take steps against whoever was responsible for a project if a budget was not stuck to, said Mr Farrugia.
“The government could have been braver in this budget – especially when it came to income tax,” he said.
Mr Farrugia called on the government to link the rate of income tax to the nominal rate of the country’s economic growth.
“Between January and July last year, the rate of economic growth was 6.1 per cent but income tax increased by 8.6 per cent. The government should not take more than 6 per cent from the people through income tax,” he said.
Nothing was done to help the self-employed except for the widening of the tax bands – something that affected all employees, he added.
Mr Farrugia expressed the GRTU’s satisfaction at the decision to invest more in the labour market but once again said that the government was very cautious.
“The private sector is more than ready, together with the government, to help those who can’t find work. The incentive to find a three-month job for people who have registered for a certain amount of time should have been extended,” he said.
The GRTU was also satisfied with the cost of living increase of Lm1.50 (EUR3.49) a week and with the investment in education.