Lm1.75 cost of living wage increase

The cost of living increase in the forthcoming budget will be Lm2.25 a week, The Sunday Times has learnt.

But employees will only receive Lm1.75 as they have already been receiving 50 cents weekly to offset some of the impact of the fuel surcharge that was introduced shortly before the Budget last year.

At that time, the Union Haddiema Maghqudin had argued that the surcharge would definitely have an impact on the cost of living and that compensation should be given immediately.

In the 2006 Budget speech Prime Minister Lawrence Gonzi, who doubles as Finance Minister, had said that the cost of living increase according to the Retail Price Index amounted to Lm1.75 weekly, but the government was giving out Lm2.50 to immediately include the impact of the higher energy prices.

Sources said that although the next Budget would continue to shift from direct taxation to indirect taxes, VAT will not be increased.

Two other measures expected to be announced on October 18 are changes in tax bands and lower departure tax.

Most of the government's options have already been published in the pre-Budget document and the government declared it could spare some Lm8 million, and income tax was one of the items mentioned.

Dr Gonzi recently made it clear that the Budget would not be "sprinkling goodies" as the government did not want to undo the work it had achieved with "many sacrifices".

The MLP, on the other hand, has been building expectations about large tax cuts.

When contacted yesterday, UHM general secretary Gejtu Vella said his union warned against "a spending spree budget".

"We do not want to compromise the sacrifices that were made to get the country back on its feet. Our message to government is to give back only what one can give back and to make sure it goes to those who deserve it.

"On the other hand, at no stage should the government give the impression that it is relaxing structures aimed at curbing tax evasion. What is due should be collected in real time, not several years later," he said.

In its proposals, the GWU is advocating a lower surcharge and a shifting of income tax bands. It is also campaigning for pensioners to be given the cost of living wage increase in full.