Survey | Sunday, 11 October 2009

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Budget 2010 – Raise taxes or cut benefits?

With government revenues down, income tax at 40% of its projected levels by end-July, and the pressure from Brussels to cut the deficit, the economic crisis has left government with little space for manoeuvre in its bid to get its act together for the next budget.
Judging by high support for tax cuts in MaltaToday’s survey (which would further decrease government revenue) and low support for cuts on the social expenditure, the governments’ options are further limited, in terms of popular demands.
Significantly, 67% of respondents in our latest survey would like the government to reduce income tax rates despite the prevailing economic situation.
But despite favouring tax cuts in general, 56% would favour an increase in income tax affecting those earning more than €35,000 a year.
Almost half (47%) of respondents would also favour the introduction of a new tax on properties kept vacant for more than a year. But 36% would oppose this measure, which would penalise property hoarders and encourage property owners to rent more properties
On the other hand, the Maltese tend to oppose any cuts in social expenditure, with a majority opposing measures directed at cutting expenditure on welfare, stipends and health.
Of the three cost-cutting measures proposed in MaltaToday’s survey, the one attracting the highest support was that of introducing charges in healthcare for the well off. While 43% agreed with a degree of means-testing in health services, 48% disagreed.

A matter of ideology?
Defying ideological stereotypes associating centre right parties with tax cuts, Nationalist Party supporters are more inclined to favour raising the tax rate for those earning more than €35,000, and to introduce a vacant property tax. PN voters are also more wary of tax cuts in the present economic situation.
On the other hand, 65% of PN favour cuts on benefits for single parents. Only 27% of Labour voters agree. But the absolute majority in both parties supports the stipend system.

A question of class?
Surprisingly, the AB category – which includes professionals and managers, who generally pay more taxes than others – is the least keen on tax cuts. Support for taxes on vacant properties is also higher among C1 respondents, who include workers in clerical, supervisory and vocational jobs.
On the other hand, working-class respondents are the least keen on reducing benefits for single mothers. Among DEs, which include unskilled workers and recipients of welfare, only 14% agree with such cuts. On the other hand, 44% of C1s agree.
The self-employed (SE) are the most likely to favour a right-wing agenda of simultaneous tax and welfare cuts. While 63% of the self-employed favour tax cuts in general, only 25% favoured an increase of taxation for those earning more than €35,000. While the self-employed were the most likely to favour cuts in benefits for single parents, they were also the least likely to agree with means testing in health and with taxing vacant properties.
But none of the self-employed want to do away with the stipend system.

The survey was conducted between Tuesday 29 September and Thursday 1 October. 438 respondents were chosen from the telephone directory. 300 accepted to be interviewed. The survey has a margin of error of +/-5.7%.


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