No plans to increase taxes, Finance Minister says

Malta’s finance minister has no plans to increase taxes to offset deficits the country will incur this year and the next as a result of COVID-19.

Edward Scicluna said the government will take the necessary steps to continue mitigating the economic and social impact of the pandemic.

The Finance Minister was speaking at the unveiling of the pre-budget document this morning.

Budget 2021 is slated for October and is expected to be a continuation of the economic recovery plan announced at the start of summer.

The pre-budget document comes with the tagline Towards a Sustainable Economy.

Scicluna said a deficit was unavoidable in battling the COVID-19 pandemic. Malta has for the past few years registered budget surpluses without the need to raise taxes.

“We know a deficit will occur again in 2021- the question is how big of a deficit we can afford. The more measures we implement, the more the deficit will increase and the more work we will have in the future to decrease it,” Scicluna said.

But Scicluna insisted that the government has no plans to increase taxes. However, his no-tax increase pledge was also conditional.

He said that in the medium-to-long term, if the government is placed in a permanent deficit-risk position, a rise in tax rates may be on the table.

The Finance Minister said that in spite of the crisis, Malta has been faring better than its European counterparts.

Malta's unemployment rate has remained fairly steady, but the blow to the local tourism sector has had a significant impact on GDP.

A number of priority areas feature in the pre-budget document, including economic growth in Gozo, environment protection, rule-of-law measures and sustaining existing economic sectors and helping them to expand.