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When the fastest growth possibility remains the increase in tourism revenues, the sudden cut in the MTA and Heritage Malta budget came as a nasty surprise. Tourism has a multiplier effect which is sure to be felt immediately and directly in the economy. Further investment in tourism especially in product upgrading and in marketing are sure to yield immediate returns and results. So this may not be the time and place for cost cutting.
Premier Lawrence Gonzi is well advised to carry on placing the reduction of the national fiscal deficit as his top priority. Our present deficit of nine point seven percent of our gross domestic product clearly breaches the three percent threshold outlined in the European Union’s Maastricht criteria.
Is Lawrence Gonzi going to raise revenue by introducing further taxes, by increasing the present rate of taxation or is Government to cut its expenditure without resorting to increased taxation?
All members of the executive are collectively responsible to ensure that the economy is well managed. This carries responsibilities of accountability on the part of all ministers and parliamentary secretaries to ensure that they reach targets and goals set at Cabinet level. This has not generally been the case.
The office of the public auditor should be beefed up.
This senior officer should ensure that government departments are run efficiently and that value for money is given whenever government offers a service. The report he presents to Parliament should be upgraded and all the necessary tools he requires to ensure that he scrutinises all government spending professionally should be put at his disposal.
All Government foundations and entities must be made more accountable. Government’s decision to set up a special unit to oversee spending is a step in the right direction. We understand that collectively, the foundations and entities overspent by Lm10 million in the last years.
Who is responsible for this excess spending? Who is to be made accountable? Can government present a report in Parliament once this unit finalises its findings?
It is crucial that all tender contracts and consultancies qualify as reaching the necessary levels in terms of value for money.
This includes using under-utilised workers productively. It is the responsibility of the government of the day as the manager of the economy. The public should also be informed of the spending to date and what is projected relating to the building of the new hospital which risks becoming an albatross lying round the neck of each tax-payer. Lawrence Gonzi should consider selling idle assets. Provided environmental safeguards are put in place, acres of agricultural land and immovable properties can be sold to sitting tenants including farmers. The selling of these properties will ignite further spending in improving the properties with the inevitable generation of work that will be highly beneficial to the economy.
Bottom line: government must think out of the box. It must think creatively to promote growth and not limit itself exclusively to cost cutting exercises, which if limited to the slashing of non essential spending and controlling discretionary expenditure, will lessen the deficit but may not be enough to stimulate the economy. The government may indeed have to resort to the unpopular measure of increasing taxation.
We remain convinced that the way forward is to ensure that all society, most especially the professional class and the persons providing services especially in private homes, pay their taxation dues. Rampant tax evasion continues unabated.
The audit trail ensuring that all pay VAT dues should be further strengthened. The ultimate fiscal aim should be that of reducing taxation to the bona fide tax payers. This is in keeping with the fairest system whereby people are taxed less on what they earn and taxed reasonably on what they buy. This will augment spending power.
One thing is for sure: we cannot simply wait for the economy to grow in the hope of a higher tax yield. We cannot just wait, for in the meantime something is sure to give!
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