Budget blues in Italy France Ireland and Malta

Source: George M. Mangion¸ PKF Malta


As published in the Sunday Independent on the 2nd  December 2012

In this article I try to compare and contrast the budget philosophy of four countries which are trading partners in the EU. To start with let us look at the local budget which is being shadowed under a strong threat to be voted against by one of the government own backbencher who acts as a grinch which ruins a festive pre-Christmas spirit. The crescendo of uncertainty which masked the presentation of this budget has created much suffering among business sector so much so that the opposition party in anticipation of it being scuppered by the aforementioned back bencher has already tried to calm waters declaring that if elected in government it will retain all its good parts together with all the price rises which were announced in the Finance Minister’s speech. In fact when Mr Vella the shadow minister for finance was asked about his comments on the merits of the budget proposals he compared the situation to a cooking show where chefs were given the same ingredients to make competing meals.In his words : “We would have preferred to buy the ingredients ourselves¸ but in this case¸ we have been given the ingredients¸” Mr Vella gallantly branded his party as a united team who can vastly improve on the delivery of the cacophony of promises proclaimed so far Amidst the rich flow of rhetoric in the presentation of the budget broadcast last Wednesday by Mr Fenech the finance minister we find a copious reference that Malta has fared much better than most Mediterranean countries .Mr Fenech prides himself to act as the strong pair of hands on the tiller. Concurrently the minister is taking part in a contest of two for the coveted seat of deputy prime minister. He was feeling ebullient about the island’s economic prospects last Wednesday projecting 1.2 per cent growth for 2013.

Having one of the lowest unemployment rates in EU at 6.5 per cent he is right to boast that this compares well with the EU average of 10.5 per cent. Also the economic stimulus has not resulted in high inflation as this now stands under control at 2.3 per cent while Mr Fenech has recovered a windfall in earnings of €180 million this year¸ when compared to 2011¸ so he argues that the time is ripe for reducing personal taxes. In his opinion this magnanimity is shared by all sectors of the population as most will soon benefit from improved standards of living¸ with more spending money¸ better job prospects and higher social benefits. The tax cuts described later on would benefit all those who so far touched the top rate of 35%. The measures were built on a series of personal tax cuts given over the years to all categories of the population. In hindsight his party prior to the 2008 election promised a lower tax rate of 25% to all managers but this was never implemented due to other budget measures given a higher priority. Now in the shadow of another election the artful minister thinks that it is a propitious time to shout from the roof tops about the reduction of the top rate. In the same train of mind Mr Fenech wanted to be seen generous with the middle class and introduced many measures to ingratiate his party with this important strata of voters. Therefore as stated earlier he reduced personal taxation for managers a