The income tax breaks announced earlier this week as part of the Nationalist Party’s economic stimulus package, which is to form a central part of its upcoming electoral manifesto, would leave a Lm20 million (e46.6m) dent in the government’s coffer, Prime Minister Lawrence Gonzi confirmed yesterday evening.

“But is it worth it to put Lm20 million in people’s pockets?” Dr Gonzi rhetorically questioned at a discussion event in San Gwann. “My reply is ‘Yes, it is worth it!’”

The initial expenditure would be recouped within two years, he stressed, and that it would not impinge on plans to achieve a budget surplus by 2010. The economy, meanwhile, would have been given an essential leg-up by a natural boost in consumer spending.

The economic stimulus package announced on Tuesday morning by Dr Gonzi is considered necessary in the face of internationally derived and looming threats of a US recession, financial market turmoil and the record prices of oil and cereals.

The income tax adjustments forming the central part of the package include dropping the maximum tax rate from 35 to 25 per cent, for those earning up to e60,000 and raising the thresholds of the 15 and 25 per cent tax bands.

At Lm20 million, the package would represent the largest income tax break since the tax relief programme began with Budget 2007.

Budgets 2007 and 2008 had each provided tax relief to the tune of Lm12 million (e27.95m) – a total of Lm24 million (e55.9m).

Dr Gonzi received a warm, and loud, welcome yesterday evening in San Gwann, in what appeared to be the biggest turnout so far in the campaign’s series of evening discussions – despite heavy rain showers in the lead-up to the event.

National Council of Women president Grace Attard, financial advisor and stockbroker Elaine Bonello and former pro-EU Iva Movement vice-president Alec Attard participated in yesterday’s discussion, which was hosted by Claudette Pace.