25 November - 1 December 1999

'Financial Times' says Malta Budget was austere

by Franco Aloisio

A report published in yesterday's Financial Times said the Maltese government presented an austerity budget for next year that includes tax increases aimed at bringing its 8.6 per cent budget deficit down as part of efforts to join the European Union and the euro-zone.

The Financial Times reported that Finance Minister Dalli told Parliament his austerity budget was just part of a series of difficult cultural and structural changes Malta would have to undergo as it prepares to be added in December to the list of countries in formal negotiations to join the EU.

Mr Dalli's budget proposals included a new 15 per cent value added tax on petrol and diesel fuel; a new five per cent tax on telephone calls; a 10 per cent rise in the tax on cigarettes; and a one per cent rise in national insurance contributions to 10 per cent. The price of bread would also rise as the existing subsidies were withdrawn.

The Financial Times said that reaction to the budget proposals ranged from applause for the government's political will, to bitter criticism from the Labour Party opposition which lost power a year ago for initiating a similar austerity programme.