this week: Slippery fish
We cant have our
cake and eat it
While Mondays budget measures will probably not
receive resounding approval, there seems to be consensus that Malta
faces serious economic problems and something has to be done. We all
want our cake and to eat it, but that is simply not possible given our
countrys economic situation.
There is no gain without pain, and it would be sensible for us to look
at the long-term prospects of any measures considered.
If the budget that is presented hits some of us, but in its complexity
shows a way of putting Malta on a sustainable footing then it should
be welcomed, even if we dont get to eat cake in the short term.
Politicians rarely like to consider the long term and we are generally
no different, but with EU accession looming, Malta cannot afford not
to take courageous decisions, no matter how unpopular.
The constituted bodies have already sounded their trumpets of resistance
to increased consumer taxes and higher pension ages. It is a matter
of some surprise to be sure that there is so much disparity between
what the government, including the Prime Minister is suggesting, and
the stands of the constituted bodies.
Only recently the finance minister met the constituted bodies for a
three day retreat at the Mgarr Hotel in Gozo, and while no agreement
was reached, it was reported that there was a meeting of the minds and
that a greater understanding of each others positions was achieved.
Judging by recent public statements of the GRTU, GWU and FOI, it would
seem that nothing of the sort was achieved.
Nobody except a masochist will envy John Dalli Monday when he announces
his unpopular measures, but history will judge him adversely
if he does not.
Faced with a deficit that government has not managed to get the better
of, there are several options to raise revenue or reduce costs.
The most obvious is to up taxation, unpopular no doubt, but hard to
avoid. This could come in the form of increased consumer tax, as has
been suggested or higher income tax. Expect that Dalli will choose at
least one of these.
Fighting tax evasion could lead to increased revenue, there have been
calls for this over the years from various quarters and no doubt there
is moral justification. The problems of going down this road however
are not small and often trying to fight evasion can be more costly and
result in even more corruption. So, yes, but it has to be a cleverly
thought out scheme.
Downsizing government will not be popular with some, but should be welcomed
by most. While it is never enjoyable to read about people losing their
jobs, it is also socially unacceptable to bear the costs of well-paid
and under-delivering civil servants.
Reducing welfare abuse and freebies is on the cards and will be welcomed,
although it is unclear sort of a saving will be made.
Eco-taxation has been spoken about for years and should now start creeping
in. While governments have not been enthusiastic to protect the environment
by fiscal measures, now may be the time to do it as options always exist
for consumers to choose other products.
Government accountability and control over government spending have
long been called for and will be welcomed by all.
Rationalising Maltas essential utilities like energy has been
long overdue, and should be welcomed by those in business as well as
the public as water and electricity costs would be reduced.
The pension age is likely to increase, perhaps not next Monday, but
in the coming months. While this is welcomed, measures taken to encourage
more women to take on paid jobs could prove to be a better alternative
and should be seriously considered.
One measure nobody is likely to object to, and which will increase spending
power would be to increase the non-taxable bands. People with lower
incomes will agree, and while in the short term government will lose
some revenue, the measure could result in the increased and investment
that the economy sorely needs.
John Dalli would do well to spread the load of measures over the entire
spectrum of possible fiscal decisions and come Monday expect a mixture
of all the above.