Budget 2026: Constituted bodies welcome 'balanced' budget

Social partners and constituted bodies gave a generally positive reaction to the Budget 2026 speech on Monday.

The Malta Employers’ Association said the budget judiciously balanced the country’s social imperatives with measures designed to enhance productivity.

“The Association acknowledges the government’s success in consolidating public finances and curtailing further the fiscal deficit. This achievement towards exiting the European Commission’s Excessive Deficit Procedure by end-2026 is particularly welcome because fiscal progress is being driven by stronger efficiency in tax collection,” it said.

The association particularly welcomed fiscal measures intended to promote investment. It also welcomed expanded Malta Enterprise Microinvest schemes such as the extension of tax credit coverage. It said however, that the Budget Speech fell short of announcing tangible measures to review Malta’s education system to support an economic transformation.

The association praised the tax incentives for parents but called for a holistic plan which must also include awareness-building initiatives, incentives for flexible work arrangements and stronger childcare and parental support infrastructure to render family life more compatible with professional aspirations.  

'Forward-looking'

The Malta Hotels and Restaurants Association said it viewed the budget as being balanced, responsible, and forward-looking.

“This Budget protects people through higher pensions, family support, and energy stability while giving employers the fiscal certainty needed to invest, innovate, and create quality jobs,” it said.

The MHRA welcomed continued investment in green transition incentives, skills development, and tourism diversification, ensuring Malta’s growth remains inclusive, sustainable, and future-proof.  

The Malta Chamber of SMEs said the budget will help SMEs to grow and remain competitive. Initiatives such as the improvement of the Microinvest Scheme, the increased support for digitalisation and the incentive to invest in R&D were among the measures that would help businesses strengthen and expand, it said.

It urged the government to continue to address employee shortages, unfair competition, governance, and traffic congestion.

Lack of capital investment

The Malta Development Association said it welcomed the budget, although it was concerned about a lack of capital investment.

It said it welcomed tax cuts for parents, a raise in pensions and other social measures.  It also welcomed the fact that there were no new taxes, enabling the economy to continue to grow.  It also welcomed schemes to help investment in the modernisation of machinery and digitisation; assistance to help employers retain their workers and plans for a Property Price Register. It expressed regret, however, that capital spending was decreasing, a factor which could cause problems in the future.  

Higher disposable income for families

The Chamber of Commerce observed that the Budget 2026 raised disposable income for families, supported businesses to embrace AI but left traffic congestion unresolved.  

"The 60% capital investment tax credit, the tax write-off incentive, the widening of the micro-invest scheme and the 175% R&I deduction create strong levers for companies to (i) adopt automation, (ii) take up AI and (iii) invest in strong cybersecurity frameworks aimed at modernising their operations and improve supply-chain visibility, intended to increase efficiency and efficacy," the chamber said.

It said other areas where its advocacy had borne fruit included the government’s commitment to establish a new logistics free zone near the airport directly linked to the Freeport.

With respect to clean energy, the Chamber acknowledged the introduction of a revised policy on photovoltaic installations on industrial rooftops. However, the Budget stopped short of outlining a comprehensive strategy for cleaner energy and long-term sustainability.

The Chamber regretted that the budget failed to address Malta’s chronic traffic congestion. Public procurement reform also remained unaddressed and the decision to tax the Cost-of-Living Adjustment (COLA) undermined the intended purpose of this measure, which was to help employees maintain their purchasing power amid inflationary pressures.

The continued postponement of the auto-enrolment with an opt-out mechanism for occupational pension schemes also marked yet another missed opportunity to strengthen Malta’s long-term pension sustainability. 

The Malta Union of Teachers said the budget was a continuation of the work done in the past years. However, it regretted that feedback provided during the consultation phase through its position paper was not included in this year’s budget.

It said it welcomed the continued investment in school infrastructure, the promotion of physical activity in schools and the strengthening of the Family-Community School Link programme. It also noted that this budget announced the expansion of the outreach programme of educators to an Integrated Outreach Engagement Programme from 2026 to 2030.

It welcomed improved allowances for families with students in post-secondary and other forms of assistance, the distribution of digital resources to students and the 15% increase in stipends.

Demographic challenges

The UĦM Voice of the Workers welcomed the measures to address Malta's demographic challenges, although it warned that other measures for a better quality of life, such as more family time, were also needed.

The union regretted that the government ignored its call for a study for a 35-hour week.