Source: Elli Touray & Janine Bernsdorf¸ PKF Malta
IN SHORT:
The 2012 Budget announced in Parliament on the 14 November includes measures with the aim of creating new jobs and consolidating economic growth.
Furthermore the Parliament shall be collecting €2.5 billion in tax revenue and announced additional tax measures to enhance foreign direct investments in target sectors¸ the introduction of new tax benefits and new tax band applications to parents.
INTERNATIONAL TAX MEASURES:
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LOCAL TAX MEASURES:
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Expectations: In 2012¸ the Minister of Finance expects the Maltese economy to grow by 2.3%. The inflation rate was not steady throughout the year and registered an increase from 0.96% in October 2010 to 2.73% in September 2011. The Maltese economy is expected to hit the 2.1% growth rate the end of this year.
The government’s deficit for 2011 is expected to reach €181.7 million or 2.8% of GDP and therefore the expectations given in the last year’s budget can be seen as confirmed. The Parliament anticipated that the Government’s deficit will decrease to €153.9 million or 2.3% of GDP. The government debt is expected to be 70.14% of GDP.
?ECONOMIC INDICATORS
GROSS DOMESTIC PRODUCT (GDP): The GDP for 2011 is expected to be €6.465 million. This corresponds to an increase of 4.9 %. The 2012 GDP is expected to reach €6.78b.
LABOUR MARKET | UNEMPLOYMENT: In the first quarter of 2011 the unemployment rate decreased by more than 2.5% (the average growth in the Euro Zone was 1%). The number of people registering for work recorded 6.212 or 6.6 % of the labour force.
FOREIGN TRADE AND BALANCE OF PAYMENTS: By September 2011¸ imports increased by 13.3% to €3¸526 million and exports also increased by 10.8% to €2¸245 million.
MANUFACTURING: In comparison to 2010¸ the total industry turnover during the period from January to July 2011 decreased by 5.7%
COST OF LIVING (COLA): The cost if living adjustment for 2012 will be €4.66 per week. The COLA shall als