A strong economic growth will be crucial if the government is to achieve the fiscal targets it has set in the 2015 Budget, including bringing the deficit down to 1.7% of the GDP.

Economic growth is projected to reach 3% in real terms this year, and the budget's fiscal calculations are based on an expected growth of 3.5% next year.

The government expects to meet the deficit target - 2.1% of the GDP - which it had set for 2014, even though the budgetary shortfall for January to September is €74.1 million more than predicted. According to the government, this is largely due to accrued payments of excise duty on fuel by Enemalta, which are expected to materialise by the end of the year.

The reduction in income tax on annual income up to €60,000 which was launched by the previous government and implemented by the present one will be concluded next year, when the top rate of 29% is brought down to 25%.

At the same time, in light of the lowest-ever cost-of-living adjustment to wages - just €0.58 a week, due to low inflation - a one-off annual bonus of €35 is to be given to full-time workers who do not benefit from the income tax reduction, along with recipients of social security benefits including pensioners. The bonus - which will be paid by the government - will also be given to students and part-time workers on a pro-rata basis.

Families whose annual household income is less than €11,900 will also be receiving a child supplement of €400 per child (€200 per child from the third child onwards), tied to school attendance, regular medical check-ups and children's participation in sport and cultural activities.

As has been the case in the previous budget, the reduction in direct taxes has been coupled with an increase in indirect ones.

The price of a pack of cigarettes will go up by €0.10-0.15, whilst an excise duty of €0.20 per litre will be levied on wine - which had been the only alcoholic drink not to be taxed.

Excise duty on mobile phone usage will increase from 3% to 4%, while stamp duty on insurance documents and services, excluding life insurance policies, will go up.

Annual vehicle licence fees will increase by up to €15, save for vehicles whose carbon dioxide emissions do not exceed 100g per kilometre. However, the registration tax on quad bikes will be decreased.

The excise duty on petrol and diesel will go up as from next year, but the prices at the pump will actually be lower, by €0.01 per litre of diesel and €0.02 per litre of petrol. Excluding taxes, Malta's fuel prices - which were locked before the European election last May - are currently the highest in Europe, but the relevant hedging agreement concludes at the end of this year.

A daily levy of €10-15, depending on the size, will be imposed on tower cranes which are set up in public streets, and excise duties on cement will increase. A new tax of €0.10/kg will be levied on feed used in fish farms.

Eco-contribution is being reformed, in a bid to ensure that local businesses are not put at a disadvantage. The first phase of the reform involves eliminating the contribution on electronic and white goods classified

Weaning people off benefits

Targeting welfare dependency is one of the main stated aims of the budget, which includes a number of measures aimed at helping or encouraging benefits recipients to join the workforce.

People under 23 years of age who are registered unemployed will have to participate in Youth Guarantee programmes to receive benefits: parents will be exempted until their youngest child is one year old. Existing claimants are being given a four-month time window to enter the Youth Guarantee.

Benefits for single parents who become employed will be tapered off over a three-year period: they will receive 65% of social assistance in their first year, 45% in the second and 25% in the third year. Their employers will themselves be receiving 25% of the benefit for the first three years.

People who receive social benefits and who get married, or form a civil union, with a person in employment will also have their benefits reduced gradually over a three-year period.

To help ensure that employers do not discriminate against women of child-bearing age, maternity leave will no longer be paid directly: instead, every private sector employer will contribute to a special fund in proportion to their salary costs. The maternity leave benefit covering the final four weeks, which is paid by the government, shall be increased and paid at a rate equivalent to the minimum wage.

The budget also seeks to help provide employment opportunities for people with disabilities through fiscal incentives: employers will be exempt from paying social security contribution for such employees, and will also be eligible to claim a tax deduction on profits of up to €4,500 per employee.