The Trojan budget

With Franco Debono set to vote against the budget, Tonio Fenech's budget is more likely to serve as the party's fiscal manifesto for the next election. 

Freed of the constraints of having to implement it before the election and with his party trailing in the polls, Debono's vote will give Fenech a free hand to present an electoral budget, which can only be implemented if his party wins the next election. This in itself raises the question: how credible is a budget that is dictated entirely by electoral consideration?

The few indications given so far suggest that the budget will include tax cuts for parents as well as higher-income earners, a measure which may well galvanise the upper-middle class vote but which could be socially regressive and fiscally irresponsible. For one may well ask: why reduce the top rate of tax instead of increasing the tax-free ceiling?

And more: how will we make up for lost revenue from income tax in the absence of other revenue streams? What impact will it have on the revenue needed to sustain expenditure on public services like health and education?

Surely this approach tallies with the PN's traditional philosophy which has been relatively successful in economic terms but which has failed to address growing social inequalities.  It will put more money in the pockets of the people who spend most and thus make help turn the wheel.

But in a further twist, without even knowing the costs involved, Labour seems to have already endorsed Fenech's trickledown philosophy and committed to retain the positive aspects of the budget.  "If a Labour government is elected we are committed to retain the positive framework of the budget," Labour leader Joseph Muscat said on Sunday.

Surely Muscat is once again putting strategy before policy. For what better way to counter a pre-electoral budget than by endorsing it?

So instead of presenting his own alternative fiscal vision for the next five years, Labour will endorse whatever is positive and vote-catching in the next budget.

In this way it is making sure that the next election will not be about competing fiscal visions, as were all contests in the US and Europe in the past five years, but a contest based on billboard humour.

Moreover, a future Labour government will not only have to finance its own promise to cut electricity bills for all and sundry but will have to shoulder the burden of implementing this government's tax cuts.

Even if Labour's mysterious alternative energy plans are realistic and doable, these will take time to implement. Labour is already committed to use more expensive diesel instead of HFO before converting the power station to gas. Therefore in its first budget Labour will not only have to find money to subsidise energy bills beyond the present subsidies while still enacting the present government's tax cuts.

In the absence of any radical U-turn after the election, Labour seems to be paving the way to bankruptcy.