Gozo lobbies give lukewarm reception to Budget 2023

Two of the leading business lobby groups in Gozo have responded to the 2023 by praising particular measures while joining other business representatives in highlighting the need to move away from short-term planning.

During the presentation of the budget on Monday, Finance Minister Clyde Caruana unveiled a number of plans that directly impact Gozo.

Businesses in Gozo as well as start-ups will also benefit from an extra 10 per cent in the form of tax credits, which can go up to 20 per cent if companies invest in projects that reduce its carbon footprint created through its operations.

A Sustainable Urban Development fund for Gozo has also been created, and will contain a financial kitty of €60 million.

Regarding tourism, Minister Caruana noted that the market for tourists who spend the winter months in Gozo is growing, and said that the Government wishes to strengthen this market.

Together with the Gozo Tourism Association (GTA), Malta will launch an incentive to attract this kind of tourism to Gozo together with tour operators, boosting the sister island during the low season

The GTA welcomed this measure, which it described as a scheme to attract seasonal migration to Gozo between the November and March period.

However, it noted that there is no mention of the ring fencing of the eco-contribution funds collected from Gozitan accommodation for tourism projects on Gozo.

The budget, admitted the GTA, was prepared “during a particular time when worldwide economies are under the strains of the war in Ukraine, during a period when the tourism sector is still in recovery mode from the effects of the COVID-19 pandemic.”

It added that “it understands that this is a Budget that in the short term ensures the sustainability of the business activity, as well as the wellbeing of the low-income earners, pensioners, and workers battling to keep up with the rising cost of living.”

It therefore praised the Government for “cushioning the economic challenges while safeguarding and sustaining economic growth”, saying that measures like subsidies on utilities and cereals will “not only assist families but will keep businesses afloat that would be otherwise crippled by rising costs”.

Like, the Gozo Business Chamber expressed appreciation for the Government’s absorbing of the steep increases in energy prices.

Meanwhile, the Gozo Business Chamber (GBC) welcomed the measure offering tax credits to start-ups on the island, as well as that related to sustainable urban development, a topic the organisation has been vocal about for some time.

“It’s an incentive to buy a house in a place that is guaranteed not to be converted to apartments,” says GBC CEO Daniel Borg, in comments made to BusinessNow.mt.

However, Mr Borg expressed concern about certain items that were noticeably absent, including the hospital and car park in Rabat, and a new care home for the elderly, pointing out that Gozo has a rapidly ageing population – with a building built for this purpose remaining abandoned.

On the digital front the GBC said it would have expected a specific incentive package for the Digital Innovation Hub in Xewkija. “The Hub is presently severely underutilised and further impetus on such an important investment would have been expected.”

The GBC also lamented the lack of measure to address an ongoing shortage of staff on the island that it says is preventing businesses from investing.

“We are concerned because we have a long-standing problem with not finding workers. We have employers who want to grow but simply cannot find the workers to do so – in everything from tourism to retail to manufacturing.”

Mr Borg explains that this has led to an over-reliance on imported labour, and described the equal reduction of tax on overtime and part-time work as a “missed opportunity”.

“There is a five per cent difference between the two, and a €10,000 threshold on overtime work. So a worker feels it is more worth their time to work with someone else than give more hours to their employer. We need to align these so that when a worker chooses, they choose their employer.”

Plans for a permanent link, which have reportedly been shelved, were also missing from the Budget speech.

On this point, which the GBC has been clamouring for, Mr Borg stresses that the expression of interest as originally published makes no mention of Government financing.

“Those who applied were meant to design, finance and operate,” he explains. “And they then collect tolls from those using it. So it would not have had an bearing on the public purse.”

This, he argues, puts paid to the idea that the project is not moving ahead due to economic difficulties.

“Significant work has been done in this area, and it is important that the impetus gained along
the years is not written off.”