An overpowering need to win political approval is proving a Pandora’s Box for The Malta Labour Party’s upcoming election campaign. The recent controversy revolves around the proposed series of measures promised by a prospective Labour government, namely: no tax on overtime, slashing the electricity surcharge, subsidies and the capping of interest rates for first-time purchasers of property and the re-introduction of public holidays. These surprise musings and the accompanying calculations are becoming increasingly suspect!
These issues were first raised during a Bondiplus programme on national television. Sets of figures were bandied about in somewhat disproportionate abandon. While Mr Bondi’s figures may have been slightly dramatic, it was far, far more worrying to analyse Labour’s estimates. In the case of the electricity surcharge, clearly no self-respecting taxpayer will believe that increasing oil prices that automatically translate into higher energy costs will be offset into thin air. Furthermore, the figure of Lm12 million in lost revenue is calculated on 2006 data, making it hopelessly obsolete. Maybe even more startling is the promise of no tax on overtime. By hiding behind a particular set of NSO figures, the Malta Labour Party refuses to reveal how it would tackle the abuse of people shifting their basic wage to overtime! Here again, the figure looks extremely conjured up – Lm2 million!
Let us move on to the third proposal, that of subsidies on property purchases for first time buyers. Here again, economic theory has taught us that interest rates may fluctuate dramatically. Hence, as in the case of the energy surcharge, putting down a figure of a mere Lm1 million smacks of political expediency.
And last but not least is the proposal to grant workers extra days of leave for public holidays falling at a weekend. In this case, the calculation is truly tired and extremely worrying – because Labour believes that this will cost the country absolutely nothing. Apart from the obvious economic implications, one fails to see how this ties in with increasing Malta’s sluggish productivity and competitiveness.
When confronted with these arguments it becomes apparent that Labour is clearly shooting from the hip in a weak attempt to derail and dilute the successful outcome of the present budget. In this sense, it is hoping to square the circle with populist promises that, if implemented, would surely mean a considerable and remarkable loss of revenue for the Exchequer – revenue that would have to be replaced by other forms of taxation. Here again, Labour dig deep and refuse to tell us how the mechanics of these offsetting measures will be implemented. This is a truly worrying sign at a time when the nation’s finances are turning the corner and reminds me of that long line of cars trawling their cash registers after the 1996 election!
These are unsustainable and fundamentally unstable proposals that will surely leave a bitter taste in the mouth, should they ever be implemented. All this funny money talk is proving a devaluation of a serious economic policy for the nation and highly suspect Labour party mathematics.
It all goes to show that many inside the Labour party are too far inside the circle. These promises, which seem to crop up as we go along, continue to demonstrate Labour’s lack of preparation to steer this country for the next term in a serious manner.
The opposition must quickly pull up its socks if it is to be a meaningful challenge to the incumbent administration.