The Labour government presented its fourth budget of this legislature, the first under the helm of Robert Abela... and the first since a virus decimated the world economy.



That's it from us

10.30am The annual marathon Monday night for us comes to an end. Remember, tomorrow's print edition of Times of Malta will give you a round-up of all the budget highlights. We'll be updating you with all other budget-related stories in the next few days. 

Keep checking our Budget 2021 section online. 

Good night.


A happy GWU 

9.43pm Malta’s largest union, the General Workers Union, is pleased with Budget 2021 and has praised the government for combining “economic caution and fiscal discipline”. 

The union has plenty of good things to say about worker-centric measures such as the extension of the COVID wage supplement and increase of in-work benefits, and it reserves a special thanks to the government for having set aside funds to compensate workers with grievances dating back decades. 

“The country must be ready for the economic growth that is expected in the coming years, not just when the world finds a COVID-19 vaccine but also as a result of the economic stimulus the government has introduced over these past months,” the GWU says. 


'Budget will save tourism'

9.35pm The Malta Hotels and Restaurants Association positively noted that no new taxes have been introduced and allowed for enough space and ability to craft further action as may be necessary at the most appropriate time. 
 
MHRA said it values the government’s strong focus on social initiatives in this budget as this will inspire a feel-good factor across all society, in difficult times for all.  
 
"MHRA strongly believes that the tourism industry is resilient and will return to be a major pillar of the economy once the pandemic subsides."


Rich in social measures, vague on economic recovery  

9.25pm The Malta Chamber said the budget fails to address the massive impact that COVID-19 is having on operating costs for businesses, and introduces no new measures to support businesses struggling on this front.

It reflects government’s optimism that the economy will recover in the short term, an optimism that is not shared by businesses at large. The chamber said it hopes that should the COVID-19 crisis deepen or extend beyond the next six months, further support beyond that included in this budget will be forthcoming.

The Malta Chamber welcomed a number of measures, including the extension of the wage supplement scheme linked to the loss in turnover of operators.


'A government afraid of facing reality'

9.05pm: Opposition leader Bernard Grech has issued a reaction of his own to the Budget 2021 speech. 

His view is that while the budget seeks to address current problems, it has totally overlooked future ones. 

“There are good proposals and others which were recycled from previous years,” Grech says, “but we have a government that is afraid of facing reality”. 

Grech says he was disappointed to hear nothing about electricity and water tariffs or about how to help “83,000 people at big risk of poverty”. 

“We heard nothing about a holistic plan to help Maltese and Gozitan businesses and we heard nothing about Gozo,” he says. 

“This is a budget that plans for today but forgets about tomorrow”.

The Nationalist Party has also issued its first reaction to Budget 2021: it says the government has completely ignored COVID-19 frontliners in its budget. 

“It’s not applause and photos that frontliners need,” the party says.

“They need a plan, resources and serious leadership."

 


Two and a half hours later...

8.55pm... Scicluna says he is closing his budget speech, eliciting the first animated moment from both the government and opposition benches. 

Hang around for some more. We have the highlights of the budget in a separate story. 


Turning over a new leaf?

8.55pm Earlier, Scicluna described the decision to slash tax rates on book royalties as a measure “to encourage more writers to publish literary works”. 

But stakeholders in the sector are not impressed by the measure: National Book Council chairman Mark Camilleri says it will lead to “pitiful returns” for authors, and reveals that the original talks were to make royalties tax-free, with publishers also getting a 100% tax rebate. 

“Compared to the support other sectors are receiving, it would have cost government nothing,” Camilleri says. 

Book publisher Chris Gruppetta agrees with Camilleri: “paroli biss” [only words], he writes.


Look beyond short-term, teachers say

8.45pm Just like other unions, the Malta Union of Teachers has acknowledged the unusual circumstances of this year’s budget. 

It says it will reserve comment on the budget speech until it has taken a closer look at budget estimates for the Education Ministry. 

But the MUT does have one key observation to make – it says the government must look beyond its short-term needs and making a concerted effort to solve the growing problem that Malta’s lack of teachers is creating.

It wants more incentives for young people to embark on an career in education.


Community policing

8.45pm Community policing will be extended to more localities including those facing significant challenges, like Marsa, ─Žamrun, St Paul's Bay and St Julian's, the minister says. 

The Armed Forces' Special Operations Unit will be strengthened and more improvements will be carried out in several bases.


What do the employers, GRTU think?

8.40pm In a reaction, the Malta Employers Association said that overall, the budget focuses on the immediate concerns due to the COVID-19 pandemic through a set of carefully designed and targeted measures, but it needs to be supplemented with a longer term vision for the country through identifying new economic sector that offer economic potential.

The Malta Chamber of SMEs, formerly the GRTU, welcomed the extension of the most important COVID-19 support measures particularly the wage supplement and the new round of vouchers.

It also noted incentives to help businesses to re-engineer their business models and invest in digital tools as well as the widening of the bracket for tax exempt businesses from €20,000 to €30,000.


New medicines, more help for elderly

8.25pm Scicluna says new medicines will be made available for patients suffering from chronic or mental illness. 

While more beds will be available, the government wants to encourage the elderly to remain independent, and this is why services like Home Help and Telecare will continue being improved.

Post-secondary students will benefit from a year of free internet.


What do you think?

8.18pm What do you think of the budget measures so far? Do you think they go far enough in these pandemic times? Were you expecting more? 

Give us your views in the comments facility below. Remember to use your full name please. 


Is it cheaper to drive?

8.08pm Motorists who opt to use their cars or motorcycles only on weekends and public holidays will enjoy a 35% cut in their road tax. 

He said the VAT refund scheme on the purchase of bicycles and e-bikes will be retained as will the scheme for the purchase of electric motorcycles and scooters up to a maximum of €400.

The grant for those who convert their car to run on gas is being raised to €400 as long as emissions are cut by at least a quarter. 

The road licence for motorcycles of between 125cc and 250cc will, on renewal, be reduced to €25 from €65. 

The existing incentives for those who purchase electric vehicles will be retained. No registration tax will be charged, while road tax will not be charged for the first five years. 

€1.5m will be allocated to the vehicle scrappage scheme where a grant will be granted to motorists who replace their vehicle, of at least 10 years old, by a newer one with less emissions. The highest level of grant will rise to €7,000.

From January, many consumers will see a reduction in registration tax and licences while others will see the same outlay as at present.  


Mixed bag for FORUM

8.04pm Budget 2021 is a mixed bag for FORUM, a confederation of Maltese Trade Unions with 13 affiliates. 

The confederation said it understood that tackling the COVID-19 pandemic was at the top of the priority list and that it is pleased to see social initiatives such as providing an additional day of leave to workers, increasing pensions and boosting green economy initiatives included in the budget speech. 

It is less happy about the government’s failure to include a measure allowing parents to use part of their sick leave allocation to care for their sick children. The measure was promised as part of Labour’s 2017 electoral manifesto, it notes.


The developers are happy

8.02pm Developers appear to be pretty pleased with Budget 2021, judging by the Malta Developers Association’s reaction. 

They’ve described the budget as a “step forward” and said many of their proposals were taken on board by the government. 

They say initiatives to encourage property purchases are especially welcome and said that initiatives to encourage developers to invest in more efficient machinery are also in line with the MDA’s vision for the country. 

MDA president Sandro Chetcuti said that sectors represented by the association now had “the right tools in place to post important economic results to the benefit of all the community at large.”


More roads projects

8pm The Msida Creek roadworks project and new tunnels as part of the Airport Intersection project will start next year.

The projects will kick-off as works wrap up on the Marsa junction project, Central Link project and the new junction between Pembroke and High Ridge in Swieqi.

Preparations will also be finalised to rebuild the Marsascala bypass and the subway near Portes des Bombes in Floriana. 


Tweet after tweet

7.55pm One and a half hours into Scicluna's speech, ministers and their assistants are in overdrive tweeting the government's pledges and achievements. The Nationalist opposition seems to be conspicuously absent in its criticism so far... at least on social media. 


A carbon dream

7.50pm Minister says there was a silver lining brought about by COVID-19 with emissions going down by around 40% on certain dates.

Scicluna insists the government still wants Malta to become a carbon-neutral country by 2050. NGOs might think that's a distant pipe dream!


Pet lovers...

... Rejoice. The minister says works on a pet cemetery will soon start. Some scepticism wiill be expected - owners have been promised a pet cemetery for several years now but plans had to be put on hold since nobody was interested in setting it up.


Redirecting tourism

7.35pm Minister says a new plan for tourism will be unveiled so as to better address the dramatic changes in the sector.

Malta must reassess its vision for tourism as we head into a new era where the sector has been totally disrupted by COVID-19.


Bad news from Brussels

7.25pm As Scicluna lays out the government's plans for the coming year, there's some worrying news for his administration coming from Brussels. The EU has just announced it will begin legal action against Cyprus and Malta over their controversial "golden passport" schemes for foreign investors, which critics say have been exploited by criminals.

We gave a heads-up about this potential scenario in yesterday's Times of Malta.


Ditch the plastic... and your car

7.22pm Malta will stop importing single-use plastics next year and sales of such items - from balloons to plastic cotton buds - will be outlawed from the following year, in line with an EU directive introduced this year. 

Scicluna said the funds for a car scrappage scheme – where funds are given to those who scrap their old car to buy a new environment-friendly one - are being increased and the highest grant under this scheme is being raised to €7,000.  

Schemes for the purchase of bicycles are also being improved.


Reduced tax for businesses

7.20pm The 1.5% tax concession on the transfer of businesses is also being extended by a year. The tax-free threshold for VAT-exempt businesses is being raised from the current €20,000 to €30,000.

The government will be introducing schemes to help business start-ups, to encourage online business, and to help firms attract new foreign investment.  

Assistance will also be given in the tourism sector for marketing, while a range of current schemes, such as those for job creation in Gozo, will be retained.

With regard to agriculture and fisheries, farmers and fisherman will be given government grants equivalent to what they pay in tax on sales at the vegetable and fish markets.  


Investing in property?

7.15pm A scheme to encourage first-time buyers to buy a property is being extended, with the property value eligible for a reduced tax being extended from the current €175,000 to €200,000. 

Similarly, reduced duties announced earlier this year on property purchases are being extended to March 2021 for promise-of-sale agreements and until the end of 2021 for the signing of contracts of sale. 

Taxes on property donations are also being eased, with the first €250,000 in the value of a property being tax-exempt, up from the current €200,000.

Photo: Chris Sant FournierPhoto: Chris Sant Fournier


What our analysts think:

Nicky Gouder from Seed

7.15pm "Most of the tax-related measures were extensions of existing measure, rather than the introduction of new ones. Most of which relate to the tax reductions on transfers of immovable property, which have been extended until 31 December 2021. The increase in the VAT exempt threshold to €30,000, is a positive introduction".


Those at risk of poverty

7.10pm Parents eligible for a supplementary allowance will as of next year also receive a €150 cheque previously reserved for people classified as at risk of poverty.

An estimated 20,000 people are expected to be eligible for the added assistance.

Supplementary allowances, which range from €4.57 to €12.54 per week and are intended to help impoverished children, are given to couples earning up to a maximum of €13,798 a year or single people making up to €9,701 yearly.

A grant previously given to help cover the costs of hiring a carer to look after an elderly person will now be open to people who need professional care for a person with a disability. The grant, which previously stood at €5291 per year, is also being upped to €6000.


Rising deficit, but debt in check

7.07pm Malta's deficit will balloon to 9.4% this year, but the country's low level of national debt mean that it is in a good position to weather the negative impacts of the pandemic. Read more about the country's financial footing


- What our analysts think

7.05pm JP Fabri from Seed:

"As expected, the Maltese economy is going to suffer quite a significant contraction in GDP. It is estimated that GDP will contract by 7.4% in real terms in 2020 before rebounding to 5% in 2021. This increase is coming mainly from the direct Government involvement and investment programme together with an increase in consumption and exports.

"This all depends on the pandemic and the way the world economy will react and how the virus will continue to spread or be contained. Although these forecasts are positive when looking ahead, they remain highly uncertain. It is therefore very important that the government invests heavily in the economy to support domestic economic activity. Such investment needs to be grounded within a long-term vision to ensure that through such investments support and build Malta’s competitiveness, attractiveness and resilience.

On long-term vision

"It appears that government is focusing on a long-term vision although no details are given at this stage; just a description of the main pillars. The pillars announced by Government are good governance, a greener economy; and, innovation and digitalisation.

This is a positive step as the country requires a long-term vision. It is important that this vision is built through a consultative process and one which is evidence-based. The world and most of our trading partners are resetting their economies and it is crucial for Malta to embark on such a transformation. We need to see a new Malta with strong governance, transformed sectors which embrace the digital transformation but also new niche sectors whilst transitioning into a greener economy. This needs to be our focus and our main concern."


Pensions increase

7pm Pensioners will receive an additional €5 a week. 

Pensioners will, as usual, get the full COLA increase, which this year stands at €1.75 a week, as well as an additional €3.25 per week increase, bumping their pensions up by a total of €5 per week.

It is the sixth consecutive budget when pensions have been increased. Last year, pensions were raised by €7 a week - the highest pension increase since 1980. 

Excluding the COLA increase, pensioners received an additional €3.51 per week in 2020, €2.17 per week in 2019 and €2 per week in 2018. 


Children's allowances

7.57pm Children’s allowances are to rise while the threshold for working parents to qualify for an in-work benefit allowance is being relaxed.

Households with an income of under €25,300 a year will see their children’s allowance rise by €70 per child, with the allowance rising from €450 to €500 for families which earn above that threshold.

The announcements are greeted with the traditional desk-banging signs of approval from government MPs.


Those COVID vouchers... again

7.55pm Every Maltese resident will be receiving another €100 worth of vouchers to spend locally. The vouchers were first introduced in mid-summer and proved to be a success at stimulating demand.

The new vouchers will be introduced in January. They will come in denominations of €10 and €15 each and the share of vouchers which can be used in retail or service outlets will double, to €40 out of the €100 in total.  

The vouchers scheme will cost the government €50 million.


Tax refunds upped

7.53pm Tax refunds will continue to be allocated, this time it will be upped between €45 and €95. A total of 218,000 people will benefit from a measure which will cost the government €16 million.

Those with low income will benefit most. 


Bounce back next year

7.50pm Malta is anticipating a reduction of 7.4% in GDP this year. However, the government is anticipating recovery next year as the economy bounces back with growth of 5% in real terms and 6.4% in nominal terms.

The growth is expected to be generated 7.5% growth in investment and 3.7% in private consumption. Exports are expected to increase by 5.5%.

These forecasts would mean an increase of 2.3% in jobs next year with unemployed to hover around 4%.

Deficit is expected to go down to 5.9% of GDP while debt will increase to 58.6% of GDP.


‘It’s not 2009’

6.45pm We've started.

As he analyses the economic area amid difficult economic times, Scicluna takes a dig at his political adversaries. He says during the 2009 financial crisis, the Nationalist government had increase its utility bills. On the contrary, the Labour government was paying €800 a month in wage supplements during the COVID-19 crisis. 

In 2009, the government had failed to deliver on its electoral promise to reduce the maximum income tax rate, but the Labour government delivered on issuing its tax refunds and added millions of euros in vouchers to help the economy.
Scicluna has more snide remarks for the former PN legislature: instead of delivering “four energy saving bulbs” (in reference to the drive towards greener energy), the Labour government had revamped the economy and generate a surplus. Despite the difficult times, this would be no austerity budget. 


As we wait... 

6.30pm Speculation is rife that this could be Finance Minister Edward Scicluna's last budget before he steps down from parliament. 

Meanwhile, there's a newbie in parliament: Bernard Grech is leading the opposition, just two weeks after winning the contest against Adrian Delia.

The Labour Party confirmed last Saturday that popular MEP Miriam Dalli and chief of staff Clyde Caruana will be co-opted to parliament, replacing former prime minister Joseph Muscat and backbencher Etienne Grech.


What do we know so far?

6.15pm Welcome to our live commentary of the 2021 budget. Chief of staff and soon-to-be-MP (and possible minister) Clyde Caruana gave a sneak peak of the measures on Monday morning but we've been sworn to secrecy about its contents.

Prime Minister Robert Abela said on Sunday that the measures will include a fresh round of spending vouchers.

He said normally the budget includes around €35 million in tangible measures which leave money in people’s pockets, but this time will be trebled to €100 million.

The cost of living allowance will be €1.75 euro/week.

Minister Scicluna arrives in parliament. Photo: Mark Zammit CordinaMinister Scicluna arrives in parliament. Photo: Mark Zammit Cordina


Is this your first budget? 

6.12pm Budget speeches are delivered in Maltese and tend to follow a template: the minister will first give a rundown of the nation's economy, highlight the government's economic achievements over the past 12 months and then go on to list the various measures to be introduced. 

The speech tends to go on for a couple of hours. Once it's done, the Prime Minister and Opposition leader normally each hold a press conference, and reactions to the budget will start pouring in from stakeholders from across society. 

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