The Budget for 2019 did not introduce any new taxes or tariffs. Rather it focused on social measures, on increasing the productive capacity of the Maltese economy and on making economic growth more sustainable. This was possible because for the third consecutive year, and in contrast to the persistent budget deficits registered since the late 1980s, this budget is targeting a surplus, of Eur165 million or 1.3% of GDP for 2019 (the budget is projected to remain in surplus, at 0.5% of GDP, even when IIP revenue is factored out). Furthermore, in contrast to the past, the government debt ratio to GDP is declining and is projected to fall to 43.8% of GDP in 2019, well below the 60% benchmark in the EU’s Stability and Growth Pact. This sound fiscal position, supported by robust economic growth of around 5% in real terms, implies that, unlike other countries in the Euro Area, the government is not pressured to introduce austerity measures to improve the budgetary situation. Rather, government has the necessary room of manoeuvre to focus on and implement its policy priorities, without jeopardising fiscal sustainability.
Thus, a key priority in the Budget for 2019 was the social aspect, with various measures being announced, including a further increase in pensions, improved benefits for carers of elderly people, an increase in children’s allowance and improved disability benefits. In the property and rent sector, following the publication of the White Paper Renting as a Housing Alternative, the Budget for 2019 also announced improved rent subsidies and equity sharing property measures to enable people over forty years of age to buy property. A number of measures supporting Gozitan workers, students and others who commute to Malta were also announced. In addition, rebates for wedding expenses and tax rebates for parents with children in private schools were also increased, whilst workers were also granted another day of leave, so that they can obtain a better work-life balance.
In the environmental sector, the Budget for 2019 announced the extension of free public transport to 14 and 15 year olds as well as to full-time students aged 20 years or over, as well as the continuation of various schemes to encourage more environmentally friendly vehicles.
Importantly, the Budget for 2019 included measures to address bottlenecks to growth, namely an allocation of Eur100 million for road reconstruction and public-private partnerships to increase parking spaces. Furthermore, measures were also announced to support the growth of economic sectors, such as financial services, i-gaming, tourism and manufacturing, as well as to promote the development of new ones, including the blockchain industry as well as artificial intelligence and the internet of things.
The Budget for 2019 thus ensures that Malta continues to register strong economic growth and that it continues to attract investment and generate jobs. At the same time, various measures announced in the Budget focus on the sustainability of economic growth, from the environmental aspect as well as the social aspect, so that the economic wealth that is being generated is distributed more equitably among the Maltese population.
This opinion was penned by PL MEP Candidate James Grech.