The budget document for 2019 offered some very interesting insights into the present Maltese economy. Its focus on the economy, the environment and infrastructure and property and rent underline the cornerstones propelling the country forward.
At a glance, the budget can be described as being positive and reflective of a growing yet cautious economy. The need to share in the general prosperity of the country is felt but does not overwhelm, with slight increases in the cost-of-living wage. On the other hand, this budget is also paving the way for Malta’s greater participation in the technology field, preparing the island to be the next tech hub for disruptive technologies.
Below are key points from the Budget speech in Parliament.
While almost every budget sees an increase in particular taxes or new taxes introduced, 2019 will not see any new taxes or tariffs introduced. A surplus of 1.3% is expected even with revenue from IIP factored out. There will be a cost of living wage increase of €2.33 a week and this will be reflected pro-rata in stipends for students. Referring to our earlier assertions of this budget focusing on making Malta a new tech hub, an entity called TechMT will be founded to help put Malta on the map of digital and disruptive technologies. This goes hand in hand with a new initiative with the purpose to attract eSports to Malta, a global phenomena already extremely popular abroad. A separate entity will be entrusted to monitor government concessions to see whether condition are adhered to. This applies to both past and present situations.
Public sector workers can postpone retirement and benefit from increased pensions, as is currently the case with private sector workers. Pensions will also increase by €2.17 per week (over and above COLA) and service pensions will increase by €200, with a further change in the way they are calculated, resulting in additional benefits for some. People caring for elderly persons over 85 years will be entitled to a carer’s allowance, while carers below a pensionable age who live and care for elderly persons will not be undergoing any further means testing. A further tax exemption of €2000 will apply for third pillar pensions. There is no change to the tax-free amount of the first €13,4000 of pension income.
Emphasis is also placed on transport and infrastructure, with it being a rather hot topic with residents of the island. All vehicle-related exemptions already in existence have been extended, together with free public transportation for 14 and 15 year olds and full time students aged 20 and upwards. €100 million have been allocated for road reconstruction, a major tour-de-force which is currently already underway in a number of areas in Malta. Vehicle VAT refunds to be concluded with final tranche of payments for cars registered in 2008. There is also a public private partnership to turn private lots in public parking spaces. In a separate declaration, there is an urban gardens project to turn public spaces into greener areas to be enjoyed by present and future generations, while a €70 VAT refund will be distributed to people installing a reverse osmosis at home. An interesting project will also kick off involving AI driven CCTV cameras in criminal hotbeds like Paceville aptly called project Safe City.
Tying in with the environment, another hot topic was discussed during budgets. Incentives have been designed for landlords willing to rent property for longer periods at below market rates. Changes have been made for rental subsidies, with single people who pay rent eligible for subsidies of up to €3,000 per year (an increase form €1,600). Couples with children will be eligible for up to €5,000 and only renters who pay a maximum of 15% in income tax will be eligible. An interesting scheme will also be set up, whereby over 40s can buy property as joint partners with the government in an equity sharing property scheme. Dilapidated buildings will be restored in an attempt to bolster social housing. But perhaps what most were anxious to know when it comes to property has indeed been confirmed: all previous property incentives including the ever popular first and second buyer scheme, UCA properties and buying property in Gozo will be extended for a further year.
Gozitan private workers commuting to Malta will be eligible for a partial refund of their ferry ticker, while carers accompanying the elderly to Malta will benefit from an increased allowance. Public sector workers on the other hand will get a €1.50 daily allowance if they use collective transport when commuting to Malta. Gozitan students will be offered affordable housing in Malta, an essential policy considered the main University for the islands is in Malta.
In the general work field, an extra day of leave will be available for all workers, with an additional tax refund of €40 – €68 to be given to every worker. People in search of a job following a failed business venture in which they were forced to close shop for various reasons will be eligible for an unemployment benefit until they find work. Workers who have been on minimum wage for at least a year will benefit from €3 a week increase, over and above COLA.
Families will benefit from increased children’s allowance of up to €96 per year if their combined annual income is less than €20,000. A number of rebates have been increased, with tax rebates for parents with children in private schools to increase to €300 per child, while wedding expense rebates will increase by €250, reaching €2000. MATSEC exam fees have been scrapped and all secondary students get free entrance into Heritage sites when accompanied by two adults.
People suffering from disability, both physical and mental will receive an additional €10 a week, thus increasing the total benefit to up to €150 a week. Children with a disability will receive €25 a week. There are also plans to introduce free public transport for persons with a disability. Meanwhile, police, army and civil protection department officials (and their families) who are permanently disabled while enacting their duty, even killed, will find it easier to get compensation due to a newly enforced special mechanism in place.