Finance Minister Clyde Caruana took the main stage in parliament last week, red briefcase in hand, and presented Budget 2025. Several measures drew public attention, such as the tax cuts and a higher children’s allowance. Here, five experts in various areas take a big-picture view. They shared their opinions with Giulia Magri.
How do budget measures forward the vision?
Marie BriguglioMarie Briguglio, economist
I believe the time has come for the discerning public in Malta to be presented with a budget document where the aims set out are drawn from an agreed, transparent vision, and where the list of measures announced are linked to the aims, are subject to an impact assessment (of their separate and joint effects) and are backed by some evidence that justifies their proposal.
I also believe the time has come for us to move away from applauding the spending of public funds as though this is something of a merit in its own right or some gifts from the party in government. Rather, the government should justify why this was the best way to spend taxpayer money.
This year’s budget (as in previous years) is a shopping list of measures loosely bundled into chapters. We are told their total cost (applause) and the number of people directly benefitting (head count).
We are not told how this reaches the aims set out and why the government considered this is the best way to reach said aims.
The questions which come to mind for instance are:
Why is children’s allowance still universal and not income-indexed? Won’t subsidising diesel harm the environment and stimulate car use and traffic – the very things we want to reduce? Why only subsidise six months gym membership for 18-year-olds, and not three months for a larger demographic? What happened to (insert any promise made in previous years which has still not materialised)?
I am not saying the budget is devoid of good measures. I am saying we do not know what makes it a good measure. We should be shown the vision, the aims, the strategy and the impact assessment.
I am saying that the time has come to move away from “what’s in it for you” to a more mature question of “does this work, for us, as a country?”
Budget does not reflect ‘quality’ slogan
Marisa XuerebMarisa Xuereb, former president of the Malta Chamber of Commerce
There is nothing in this budget that tangibly aligns with the ‘quality’ slogan, apart from acknowledging that we need to prioritise quality over quantity going forward.
A lot of promise is attached to Malta Vision 2050. There were previous attempts at something similar, starting with Malta’s Sustainable Development Vision 2050, published in 2018. Then came the Post-COVID Strategy and Malta’s Economic Vision 2021-2031, launched in the summer of 2021.
There was an election in March 2022, and nothing more was heard about that. How is this going to be different? How will it distinguish between businesses that have big ambitions and are ready to invest in new technologies and innovative business models, and those that are happy to exploit the status quo for as long as they can?
Regarding budget measures, people will have more money in their pockets thanks to the revision in tax bands and the increase in children’s allowance and other benefits, meaning they are likely to spend a bit more next year.
COLA is €5.25 per week, nowhere as steep as last year, and imported inflation seems to be down to pre-crisis level. Let’s hope we manage to keep locally induced inflation in check, which may prove to be challenging if the recruitment of third-country nationals is curtailed and domestic demand continues to grow.
Recruiting people will become harder than it already is and now might be a good time to invest in more digitalisation and related employee training. But there’s no new assistance for that in this budget. Corporate tax remains high at 35 per cent and the government is becoming more efficient at collecting dues.
Splashing money instead of finding solutions
Wayne FlaskWayne Flask, activist and Il-Kollettiv secretary
Labour’s claim of a social budget, which rides on the wave of the announced tax cuts, betrays the government’s general lack of vision. While Clyde Caruana announced that these cuts will cost €148 million – from the government’s €500 million booty in previously uncollected taxes – workers will have to fork out an additional year in NI contributions to receive a full pension.
The big egg has cracked: the government is sending the message that our pensions are far from stable (Caruana uses the word “sustainable”) and that whatever gains are made from those tax cuts will be offset by the increasing pressure on our pension system. In short, Caruana is telling us to use that tax cut money on a private pension.
Unless the government collects a steady flow in late taxes yearly, the tax cuts themselves will become unsustainable by the time we reach the next general election. We already know, through Caruana, how it will be impossible to recoup the billions due to the taxpayer in uncollected taxes.
While the shift in tax brackets will have a welcome, yet limited effect on those who earn just above the minimum wage, the government’s philosophy of throwing money at structural problems instead of reforming the system prevails in yet another budget.
There is no effort to shift to the much-trumpeted new economic model: one which sees increases in salaries across the board, to incentivise more people to become part of essential healthcare, education, law enforcement and social services workforce; one which gives those in or at risk of poverty (16.6%) the chance for a decent quality of life; one which puts people before businesses, some sectors of which were described as a “cartel” by Caruana himself; one which favours serious green investment which works for our communities.
There is yet no sign of a new migration policy, and there are big toes to step on in a reform which should curtail the influx of migrant workers for their exploitation, also removing the tragic 10-day policy which facilitates it. This new policy cannot be drafted without a proper regulation of the market and the multiple avenues for discrimination and exploitation, and without the state’s effort in stepping up the integration of these workers into our society.
It seems the economy will still depend on construction, which contributes a measly 0.3% to our economic growth, while employing 5.9% of the workforce; a disproportionate gap in productivity, which indicates where this sector’s profits are going.
I’d say it’s the tired budget of a government that can only think of splashing about money to save its seat, one that does not look at the long-term realities of our population or the stability of our welfare state and public services; there is no effort to think about solutions other than throwing public funds at a problem.
Creative ecology needs more than cash
Maria GaleaMaria Galea, cultural strategist and president of the Malta Entertainment Industry and Arts Association (MEIA)
MEIA welcomes the promised increase of €2 million for Creative Malta, a measure both MEIA and the Malta Producers Association (MPA) previously advocated for, alongside other priorities such as the National Film Policy.
While these funds are a positive initial step, they remain insufficient to meet the pressing needs of our domestic film sector; a sector which has been neglected for far too long. We are, however, optimistic that the shift in funding management to Arts Council Malta will lead to more effective utilisation of resources and are pleased that our advocacy efforts have finally been acknowledged.
It is vital to acknowledge that a thriving creative ecology requires more than just financial injections into temporary projects. We need a holistic approach that considers long-term sustainability and support from all facets of the industry. This includes revisiting venue rates, tax structures, new financial models and removing barriers to accessibility.
The wage regulation order mentioned in the budget is another critical area of focus. We hope that the proposed amendments will include and address the needs of our sector too, where many workers face unregulated and precarious working conditions that require urgent attention.
We also requested a revision of the 7.5% tax rate, which will be discussed with the Commissioner of Revenue in the coming days. We hope this will be implemented in accordance with the specific needs of our sector as the current model has proven to be completely inefficient.
Regarding the Marsa Cultural Hub, it is projected to cost significantly more than €15 million as mentioned in the budget. However, from our understanding, this amount appears to cover only the first phase. It is essential that its implementation mirrors successful institutions like Micas, where intensive research and collaboration with local and international experts are paramount.
We acknowledge that significant progress has been made in recent years, particularly in strengthening public organisations that are vital to our sector and investing in infrastructure. However, we must also recognise the daily realities faced by professionals in our industry.
Many are compelled to juggle multiple jobs to sustain their practices, while others struggle with a lack of access to essential resources such as production spaces, they contend with high costs, limited accessible financial models and loans, and a constantly competitive environment between the private and public sectors.
Overall, we are pleased with the open discussions we have had with various ministries and hope these dialogues continue and, most importantly, lead to implemented actions.
However, we are still far from this shift towards a more holistic approach, a budget, and a government that recognises the need for integration across various ministries.
While some may call us dreamers, we are simply recognising the potential that exists. Together, we must work year after year towards this shift; it won’t happen overnight.
A truly impactful budget is one that understands and acknowledges both the realities and the missed opportunities within our sector.
Lack of measures to force people out of their cars
Maria AttardMaria Attard, director of the Institute for Climate Change and Sustainable Development
Although there seems to be a lot of reference to sustainability in transport, there are few tangible measures that will push the much-needed change.
Many of the measures mentioned in the budget have been promised already (for example, cycling), and most focus on the car, rather than on the alternatives that force people to stop using their car.
Free or more parking will not change much but will make it worse. Investment in EVs is good for local environments but we burn fossil fuels to generate electricity! More EVs will not solve the problems of congestion and health-related impacts from road accidents, lack of walking space for people, obesity and loneliness, most brought about by car-centric environments.
The budget lacks concrete measures that force people out of their cars. It is not enough that public transport is free, it needs priority over cars. We need bus rapid transit or light rail systems that are more efficient. We need more pavements in our urban areas so people are encouraged to walk short-distance trips.
Investing in more car travel and car infrastructure only deepens our problems and makes it even harder (as it is already very hard) to implement change.
I understand the political challenges, but our health and our environment are showing signs of stress. Not acting upon this will not only continue to lower our quality of life (I believe it is already low) but also make it impossible for future generations to enjoy the islands as we know them.