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MAM reactions to budget measures - 1/12/2004

The budget presented by the government has a number of positive points, but MAM has reservations on some others.

The fact that the government is putting the environment on the top of its agenda is greatly welcome. The investment in proper waste management, financial incentives to encourage the use of solar panels/heaters and electric cars, measures to curb the abuse of kerosene and the commitment to monitor air quality are therefore highly praiseworthy measures. However the eco-tax should not, in principle, increase the tax burden but rather shift tax from environment-friendly products or practices to ones that harm the environment.

The increase of taxation on cigarettes and other tobacco products is in keeping with international trends and recommendations in order to help decrease their use.

Financial incentives to attract international conferences are also highly commendable as these are very lucrative to the country. In this regard, MAM has already submitted proposals on how to attract more international medical conferences to Malta and is presently working closely with Malta Tourism Authority to this end. It is noteworthy that, in fact, most international conferences held locally are of a medical or pharmaceutical nature, thanks largely to international contacts of doctors.

MAM does not, however, support the move to reduce public holidays. Productivity depends more on having a motivated workforce and this step is therefore likely to be counterproductive. One should also mention that Maltese workers already have low salaries compared to EU norms (this is especially so for doctors) and that the basic working week is amongst the longest. The surest way to promote productivity is to reward those sectors that are performing well, so that the others will be encouraged to pull up their socks.



In spite of the government’s financial position, one has to be very careful in continuingly increasing an already substantial tax burden as this will stifle economic growth and paradoxically decrease the government’s income in the long term. The high tax burden and an unfair and autocratic Tax Compliance Unit are contriving to scare off local and foreign investment. This explains why Malta has had a very small economic growth when compared to other countries. These same factors, coupled with low salaries, are also serving as a potent force to promote a brain drain, something which the country can ill-afford. These are the points that the country needs to address urgently if it is to start the road to recovery.



 
 
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