Updated | 'No indication Malta's budget in breach of EU rules' - government

The government “has no indications” that Brussels may have found Malta’s budget to be in breach of EU laws as reported by the Financial Times.

According to a report by the Financial Times, Malta is among five countries whose budget plans risk breaching EU rules.

“The government has no such indications,” a spokesperson for the government said in an initial reaction.

The five countries are Malta, France, Italy, Austria and Slovenia. According to the same newspaper, a spokesman for the EU’s economic commissioner Jyrki Katainen said the move “would not mean that Brussels had definitively decided to reject a country’s budget plan”.
All eurozone countries, including Malta, submitted their budgets to Brussels for review.

The spokesperson added that the European Commission has up until today to request clarifications on the draft budgetary plans. A final decision is taken at the end of the month.

“This is the second time that a similar procedure has been introduced in the EU. In the case of Malta, our main issue is when budgetary measures are announced and how our schedule can fit the EU’s,” the spokesperson said, adding that the government was confident the process would conclude positively.

Under tightened-up European Union budget rules adopted last year, euro area member states have to submit their draft budget plans by 15 October every year for approval by the European Commission. The Commission is meant to pass the plans by 30 November.

However, in cases where the Commission identifies any particularly serious non-compliance with EU budget rules, it has two weeks to issue an assessment asking for the finance plans to be reworked to bring them into line.

In a pre-budget glimpse of what is on offer this year, finance minister Edward Scicluna’s fiscal measures’ draft to the European Commission shows that VAT rates will remain unchanged, but that government will remain focused on shifting towards indirect taxation and easing the burden of direct taxation.

The report says that earnings from the Individual Investor Programme – Malta’s €1.15 million passport sale – will deliver 0.6% of GDP in 2014 and 0.57% of GDP to the Maltese economy in 2015, possibly averaging some €45 million each year.
The report said that further revenue in indirect taxation equivalent to 0.3% of GDP will be levied on consumer goods and services, and 0.06% of GDP will come from a revision in fees on market output, to compensate for the revenue foregone due to the lowering of income tax bands.