Updated 0900 Budget Reactions
Chamber: Budget acknowledges change, does nothing about it.
Malta Chamber said that Budget 2025 acknowledges the need for change but does nothing about it. “While the Government has recognized the importance of quality over quantity, Budget 2025 lacks the necessary measures and economic vision to drive a major quality leap and a tangible improvement in the well-being of society”, the business lobby said. In a statement, the Chamber said that the budget that incentivises consumption but does not address productivity, competitiveness and attractiveness for investors. The focus is on distributing wealth rather than generating it in a sustainable way.
Domestic Consumption and Social Measures Overshadow Economic Transformation, Competitiveness and Sustainability – MEA: In its initial reactions to the national budget speech, the Malta Employers’ Association commented on the fact that once again the national budget seems to place an emphasis on social measures which are not matched by commensurate competitive enhancing measures to ensure balance in future economic growth in the years to come. The MEA takes note of the Government’s flagship budget measure in relation to reduction in income tax contributions to the tune of €140m through adjustment in tax bands across all categories of taxpayers. The MEA also noted the renewed efficiency in tax collection and the Finance Minister’s assurances during the Budget consultation period that this measure will not compromise the country’s aspirations in making the necessary strategic investments or its position with the European Commission in terms of the Excessive Deficit Procedure.
Forum welceoms tax cuts, laments pensionable age measure: Forum Unions Maltin welcomes the income tax cuts and the increase in children’s allowance as support for employees and families, along with incentives for retired workers to engage in mentoring. However, they expressed disappointment over the new measure impacting individuals born in 1976, which has stirred significant controversy on social media.
SME Chamber welcomes energy subsidies, says minimal fous on business
he Malta Chamber of SMEs noted that, while the Budget continued energy subsidies and extended work-life balance measures, none of its own proposals were adopted, with minimal focus on businesses in the document. The SME Chamber expressed approval for the expansion of lower tax brackets but pointed out that the electoral commitment to reduce business tax from 35% to 25% remains unfulfilled, placing local businesses at a disadvantage compared to foreign-owned firms taxed at an effective rate of 5%. The Chamber also highlighted the Budget’s lack of measures to address pressing employment issues, such as job-skill mismatches and recruitment challenges.
Morning Briefing
Income tax cuts announced in Budget
The government’s Budget 2025 includes notable income tax changes, simplifying tax brackets and increasing the tax-free income threshold. While income over €60,000 will continue to be taxed at 35%, Finance Minister Clyde Caruana noted that the adjustments are expected to cost the government €140 million. With the revised threshold, around 18,000 current taxpayers will no longer pay income tax starting next year. The cost-of-living adjustment (COLA) for the coming year has been set at €5.24 per week. Caruana also provided economic forecasts, estimating a 4.9% real GDP growth rate for this year, slightly decreasing to 4.3% in 2025. Employment growth is expected to hit 4.6% this year and 4.1% next year, while inflation is projected to average 2.5% in 2024, aligning with the European Central Bank’s 2% target by 2025, provided no major geopolitical disruptions occur. Government also expects the country to remain in the excessive deficit procedure for another year.
The government will raise the required years of contributions for full pension eligibility from 41 to 42 years for those born in 1976 or later. This change is part of a strategy to manage increasing demands on the pension fund while ensuring its long-term sustainability. Caruana highlighted the government’s consistent support for pensioners, noting that annual state investment in pensions now exceeds €400 million.
PM, Opposition leader react to Budget 2025: Prime Minister Robert Abela said that students who delay entering the workforce to pursue higher education will not need to retire later. Addressing concerns following the Budget announcement that individuals born in 1976 or later will need 42 years of social security contributions for a full pension—up from the current 41 years—Abela explained that the government covers national insurance contributions for students and others in specific circumstances. This provision enables them to still qualify for a full pension at age 65, even if they haven’t worked for the full 42 years. Opposition leader Bernard Grech said the Budget was crafted to protect Prime Minister Robert Abela’s political standing following the European Parliament election results in June. Speaking to journalists outside parliament, Grech argued that while the government recognises issues like quality of life, infrastructure, overpopulation, power cuts, and drainage problems, the Budget falls short in addressing these. He said, “These issues affect not only the people of Malta but also potential investors. This is a Budget that leaves you stuck in traffic, waiting at hospitals, and without the medicines you need.
Youth who placed explosives near PL HQ declared insane by Court
David Brincat, 18, arrested in May for allegedly setting an explosive device outside the Labour Party headquarters, has been declared legally insane at the time. The device, which detonated in a garbage bin, prompted a police investigation that led authorities to Brincat’s residence, where chemicals for making explosives were found. He was linked to similar incidents at two pharmacies and suspected plans to target additional sites. In court, three psychiatrists testified that Brincat was suffering from substance-induced psychosis, leaving him unable to understand or control his actions. Following this, Magistrate Kevan Azzopardi ordered his detention at Mount Carmel Hospital under the Mental Health Act, with case records sent to the Attorney General for further review.
