PN rejects minister's 'weak' argument in favour of higher fuel prices

The Nationalist Party has vehemently rejected the finance minister's claim that fuel prices should be kept relatively high as a measure to discourage traffic.

This morning, Edward Scicluna reiterated that "one has to charge accordingly" due to high externalities of pollution and congestion.

"I didn't invent excise taxes myself. Take fuel, alcohol and tobacco: excise tax is an extra tax over and above the VAT. Society sees the extra costs these products put on the taxpayer," he said, adding that the government was still reducing the price of fuel.

Dismissing Scicluna's argument as "weak", PN deputy leader Mario de Marco told a press conference that consumers and businesses shouldn't foot the bill for "government's inefficiency to solve the traffic problem".

"Malta's fuel prices are higher than the EU average, therefore rendering our businesses less competitive," he said, pointing out that Malta has recently slipped in the global competitiveness rankings. "Malta must be the only country in the world to harm its own competitiveness in an attempt at solving a traffic problem."

He said that the government can counter traffic by making it easier for workers to travel to industrial zones, by allowing students who attend independent schools to use public transport for free, and by improving the efficiency of the public transport system.

He dismissed the ‘vicious cycle’ argument that buses get stuck in traffic jams, therefore rendering them unreliable and unpunctual and encouraging people to use their private cars, and hence increasing the traffic problem.

Instead, he insisted that more people would be incentivised to use public transport if the service was to improve.

Public sector wage bill, national debt on the rise

De Marco warned that government expenditure is set to increase by 22% in the first three years since Labour’s election to government, particularly due to a ballooning public sector wage bill.

Citing the government’s estimates for 2016, he said that the public sector salary bill is set to increase from €609 in 2012 to €790 million in 2016.

Moreover, he argued that the government’s previous public sector wage estimates had both fallen short – by €13 million in 2013, by €34 million in 2014, and by €31 million in 2015.

While he admitted that this rise was partially due to fresh collective agreement negotiations, he insisted that a substantial part of it was due to the public sector headcount increasing by 3,000 people since 2012.

He rejected the government’s argument that this rise was down to employment increases in public healthcare and education, citing national statistics as saying that the education public sector only increased its workforce by 282 people since 2013 and the healthcare sector by 551 people.

“The economy is not expected to grow at such a fast rate next year, which would make the high government expenditure increasingly problematic,” de Marco said, citing such concerns from credit rating agencies Fitch and Standard & Poors.

While government salary expenditure has increased and the national debt has skyrocketed up by €600 million since 2013, government capital expenditure has declined by €125 million.

“Scicluna has explained this off as the result of the government only just having started to absorb its EU funds,” de Marco said. “However, this means that the government was too slow in implementing the budget for EU funds and that despite a ballooning public sector workforce, excess bureaucracy is still very much present.”

Budget criticism: Tourist tax, SMEs and middle class

Zeroing in on specific measures announced in the Budget for next year, de Marco criticised the measure that will see tourists pay an eco-contribution of 50c per night at a hotel, capped at €5.

“Tourism figures have been on the rise since 2007, and we shouldn’t mess around with a winning formula, even with a minimal tax,” he said, while warning that the measure will discriminate between tourists staying at hotels and those staying at other private accommodations.

Opposition MP Robert Arrigo hit out at the Budget for “not announcing anything that will help small and medium businesses”.

“With regards cooperative initiatives, the government simply said that it will discuss proposals – just as it had said in the previous two Budgets. Apparently, these discussions are dragging out for years.”

Opposition MP Kristy Debono accused the government of “ignoring and discriminating” against the middle class.

Income tax reductions announced in the Budget will see single declarations up to €19,500 benefit from an annual €90 tax cut and couples with a joint declaration of up to €28,700 benefit from a €120 tax cut.

However, Debono warned that this scheme discriminates against middle class people earning just above those salaries, who won’t benefit from these new tax cuts.