Prime Minister plays down ‘electoral budget’

Budget 2013 is "not an electoral budget", Prime Minister Lawrence Gonzi said on RTK radio today, insisting that yesterday's budget of tax cuts for high income-earners was drawn up within the parameters of the European Commission's strict monitoring.

Yesterday's budget cut income tax for a wide range of high income-earners from the top tax band of 35% to 32%, for those earning €19,501 to €60,000, with a commitment to reduce the tax to 25% by 2015.

"This is a measure that was part of our electoral programme," Gonzi said of his 2008 promise to reduce taxes for everyone.

"We feel that low-income earners have already benefited from previous incentives from our budgets," Gonzi said, mentioning various initiatives in the form of increased children's allowance, supplementary pensions, childcare allowances, and added social transfers for people on minimum wage.

Gonzi said this year's COLA would supplement minimum wage, while parents on minimum wage would earn €1,155 in children's allowance, and their children who attend university would get a higher supplementary stipend.

"We felt that our economy could take this step - we had our finances in a good state, our economy was showing good signs, and we felt we could leave more money in people's pockets in the belief that this could create more growth," Gonzi said.

The prime minister hit out at criticism by the General Workers Union, which had demanded a six-month cost-of-living-adjustment allowance. Gonzi said there was no indication he would change an annual system that enjoyed the support of the social partners.

"I still feel the GWU is married to Labour as it was way back in the 1980s... my concern is that we go back to the days when this union defended Labour's interests instead of the workers' interest. Even its newspaper l-orizzont today is the voice of the Labour party. I don't think unions should defend politicians but workers."

Gonzi also hit out at the reaction by Opposition leader Joseph Muscat to yesterday's budget, which was followed by billboards lauding Labour's ability to deliver the budget's promises if elected to power in 2013.

"Countries that suffered inside the eurozone had leaders like Muscat - he is enjoying himself in his glasshouse, coming out with ideas thinking he can solve all the problems in the world. On my hand I have been facing real crises during these past five years."

Gonzi faces a real risk that he calls elections in early December if Nationalist MP Franco Debono votes against the budget, a warning he sent months ago when he demanded the resignation of transport minister Austin Gatt from the government cabinet.

"If somebody has decided not to have faith in Austin Gatt, should I take note of this concern or should I not safeguard jobs, invest in schools and social benefits? This is our duty, a duty to take the best decisions possible, and it is thanks to these decisions that Malta is in the state it is today."