Back on the campaign trail yesterday morning and visiting shops in Birkirkara, Prime Minister Lawrence Gonzi observed brisk business being done while shop owners remarked how the euro changeover yesterday.

Dr Vassallo said he was happy that the coalition culture in Malta had finally taken off after Dr Gonzi has decided to copy AD’s proposal of reducing the maximum tax rate. While AD had proposed to reduce taxation from 35 per cent to 30 per cent, Dr Gonzi said if re-elected, his government would be axing income tax by 10 per cent. He compared the PN’s proposal to Labour’s proposed two-month tax amnesty for all in 2003.

Dr Vassallo said AD was proposing to compensate for its five per cent tax cut by raising banking companies’ taxation and strengthening tax compliance.

Government finances must really rest on rock solid foundations rather than just solid ones if the government has proposed to tax people at 25 per cent, said Dr Vassallo. He said people would not like to be told after the next election that such a promise could not be fulfilled. This happened with hunters, he said, as they were promised the moon and then the EU was blamed for unfulfilled promises.

The AD chairperson said his party had been putting forward a tax reduction proposal for the past two budgets. “It is bewildering how a government which has been in power for almost 21 years has put forward a shock proposal regarding a tax cut just days prior to a general election. Such irresponsible proposals are expected from opposition parties not from the outgoing government,” he commented.

Dr Vassallo asked the government not to dismantle the fiscal discipline which it had built over four years in order to qualify for euro adoption. This must not be undone prior to the general elections, he held. The AD chairperson said he doubted whether such a hefty fiscal exercise could be carried out without consulting with EU Economic and Monetary Affairs Commissioner Joaquin Almunia.

He commented that AD and most Maltese people were in favour of EU membership in order to curb Maltese governments’ power. Dr Vassallo praised AD for its consistency and its long-term policies which had always respected voters’ intelligence.

Asked whether the PN proposal was comparable to Labour’s proposal of axing surcharge, Dr Vassallo said that the MLP promise was cheaper, but it defeated the purpose of curbing carbon dioxide emissions and fuel wastage.