MEA calls for reductions in income tax, VAT and utilities in Monday’s mini-budget

The Malta Employers Association is recommending a temporary reduction of company tax from 35% to 30% as well as a general reduction in VAT, to 15%, and even lower, at 5% for the hospitality sector. In recommendations forwarded to Government before Monday’s mini-budget, the employers group is also pushing forward a reduction in utility bills  and an extension of the wage supplement till September.

In a statement, the MEA said that expectations in a number of economic sectors are that recovery will be slow and may take between 2-3 years to reach pre-COVID levels of activity.  It said that on average there are approximately 75,000 fewer persons – thereby consumers living in Malta (including tourists and third country nationals) than there were in June 2019. As trends over the past five years pointed towards an expansion in total population, businesses catering for the  domestic market, such as catering, retailing, rentals and so forth,  increased their capacity accordingly.

Domestic demand has also decreased because many employees have suffered a drop in income -through loss of overtime, a reduced hour week etc. – even if they have been retained in employment.

The MEA said that although the budget is addressing what is essentially a force majeure situation, it should also act as a catalyst for discussion and planning to shape the economy to move towards higher value added activities which place quality over quantity. The crisis has also had some positive side effects, especially with respect to the environment.

“We should be proactive and start thinking now about how to address air and noise pollution, which have been reduced during the past three months, to improve people’s quality of life. Other environmental matters, such as food security and the transition to green technology should also move up in the hierarchical ladder of national priorities. It would be a lost opportunity if these issues are not addressed.”

The MEA has also requested an extension of the Teleworking Scheme indefinitely to encourage a better take-up and implementation of remote working systems. It has also appealed for cearer guidelines for returning to work and insisted that child Care and summer schools were to accommodate all students as this was having an impact on the turnout of parents at work.

It also called for re-training schemes and employment support programmes for persons who lost their job as well as the reduction of bureaucracy for the extension of  work permits for third-country nationals who are still in employment as there is still a demand for foreign labour in certain sectors.