Unions lambast VAT rate hike

The government's decision to increase VAT by three percentage points was lambasted by both the General Workers' Union and the Union Haddiema Maghqudin in their separate official budget reactions.

The councils of the two unions met on Friday to discuss the budget presented by Finance Minister John Dalli last Monday.

According to the GWU, the budget failed to tackle the "real" problems of the country like unemployment and the need for measures to create new jobs.

The budget did not either create any initiatives to lure more investment towards Malta.

Besides, the three percentage point increase in VAT would have a negative effect on the economy, workers and pensioners, the GWU said.

The Lm39 compensation given by the government to dampen the effect of the rise in VAT was not sufficient, the union said.

Despite the promises given in previous budgets, the budget also failed to introduce comprehensive measures to eliminate tax evasion, the GWU held.

The union urged the government to embark on discussions with the social partners to study the impact of the eventual introduction of the euro.

The UHM expressed its satisfaction that the planned pension and welfare reform was going to take place after the budget following a discussion within the Malta Council for Economic and Social Development.

It said the increase in VAT would be an added burden on workers and pensioners, adding that it would monitor the situation to ensure that any rise in the cost of living would be compensated.

Furthermore, the elimination of levies should also be reflected in a reduction in prices for the consumer.

Referring to the privatisation of the Freeport, the UHM said the exercise should not be concluded before a proper consultation process, which would safeguard the jobs of workers and after the signing of a new collective agreement.

The UHM said it viewed positively the setting up of health funds and augured that the deficit would be whittled down to Lm52 million by 2006.