Labour aiming for three percent
reduction of fiscal deficit by 2006
Labours plan for economic growth will start in 2004,
its manifesto reads, but at no point is there an indication of when
the five to six per cent growth can be expected.
Smart. The PN do not fulfil their promises, whilst Labour disclaims
its pledges by saying it will be working for a growth in the economy,
without committing to when we can expect this growth.
Its bold pledge for deficit reduction is more straightforward however.
Labour believes that "under current economic circumstances"
it will decrease the fiscal deficit by three per cent by 2006.
What is evident in Labours manifesto is its bid to streamline
public expenditure and the public sector. And this not only through
ensuring efficiency, productivity and cutting
It is the core network of friends-of-friends Labour is about
to get, which is why it will be replacing the Malta Enterprise fledgling
through the Malta Development Corporation as its FDI one-stop-shop.
It will be conducting an assessment of the public finances through a
team of independent auditors, a promise Labour has harped on through
the last year, to carry out a clinical analysis on the public finances.
Labour has also earmarked Lm22 million to be cut off the government
spending list, which it claims is spent on harmonisation with EU legislation.
Wastage in government and parastatal corporations, foundations and consultancies,
will be eradicated through intensive and systematic planning.
Labour has also set a six per cent yearly increase in capital expenditure
directed to the completion of educational, environmental and transport
projects, as well as FDI initiatives and worker re-training schemes.
On VAT, Labour once again reiterated its endorsement of the tax in view
of the economic scenario, but pledged to review the tax.
VAT rates will be reviewed to remove negative impacts of the tax on
the tourism sectors, essential products and services, education, culture
and sports. NGOs will also be exempt from VAT, upon registration of
their special status.
Income tax rates and consumption tax will not be increased, but work
will be directed towards an alleviation of the tax burden over the next
It will be inciting more domestic spending through special measures
upon re-election, and address the unemployed, especially those below
30, through a series of training schemes for the developments of trades
Two quirks are apparent in the financial services chapter. Labour pledge
to conform with international regulations, without foreign interference.
Concurrently, Labours manifesto speaks of fiscal harmonisation
with the EU, and a mission to attract financial trading from Luxembourg,
Ireland and Cyprus.
In banking, it will seek to investigate HSBCs dominant position
in the banking sector. Although it is apparent that Mid Med had already
been dominant in banking since before the HSBC take-over. Concurrently,
Labour talk about attracting established banks to transfer their business
and financial activity over to Malta.
The focus is however attuned to turning Malta into a centre for financial
services, operating a Swiss model and to beef up what could
have the promotional aspect of the Malta Financial Services Authority.
This also includes the creation of a special unit to attract financial
service providers and investment fund managers from abroad.
Labour also proposes to remove the 15% capital gains tax on collective
No detail is given on proposals seeking to reform the council for the
Malta Stock Exchange, and to ensure high officials in regulatory institutions,
such as the Central Bank, have no conflict of interests.
Labours tack on privatisation is the ensuring of planning and
transparency, without any space being given for speculation on such
projects. More space has to be given to public participation for their
investment in these enterprises.
In response to the need of privatisation, Labour sees Governments
privatisation drive limited to 40 per cent of commercial entities which
have a natural monopoly.
In other areas where no natural monopoly is apparent, a broader privatisation
can be considered.