‘We will not add new burdens on taxpayers & businesses in any way,’ says Finance Minister of Budget 2023

Finance and Employment Minister Clyde Caruana on Tuesday said no new taxes or burdens would be introduced for citizens or businesses in the upcoming Budget 2023 announcement.

He was responding to questions by the press before a meeting with Malta’s social partners on their budget proposals, when he told Malta Today:

“I want to assure everyone that the country is up to the current challenges. We do not need to go down to the austerity route and introduce new taxes. We will not add new burdens on the taxpayers and businesses in any way.”

The finance minister also remarked that had the Government chosen not to subsidise the increased costs of electricity and fuel, the cost of living adjustment (COLA) in 2023 would have topped €25, instead of the €9-€10 being envisaged.

The COLA has been a topic of particular concern for Malta’s business and employer lobbies. On Tuesday, the Malta Employers Association called for the COLA to be capped at €6 weekly for the next five years, warning that more than half of companies would be seriously impacted by this year’s increase.

All employees receive a COLA, and it is worked out on a formula that assesses the prices of a basket of essential and widely used items and services.

COLA is essentially the cost of maintaining a certain standard of living, and incorporates price movements on 40 products including food, water, electricity, clothing and more.

With shipping routes being jammed up following COVID restrictions being lifted across the globe in 2022, and Russia’s war in Ukraine having unimaginable worldwide economic consequences, as well as persistent staffing shortages for many industries putting pressure on company wage bills, inflation has hit citizens and businesses alike in significant portions of daily life.

The Malta Chamber of Commerce, Enterprise and Industry has issued its own warnings about the COLA, warning that granting the full increase to everyone would lead to further inflation. In its Budget 2023 proposals, it called for workers who received a raise in 2022 not to receive the full COLA, and instead receive the difference between their raise and the proposed adjustment.

This would contain inflationary pressures, it argued.

In his comments to the press, Finance Minister Clyde Caruana boldly said the economic challenges presented by the war in Ukraine were bigger than those experienced during the pandemic.

Indeed, on a micro level, business owners anecdotally say that while many went through financial reserves to survive the pandemic, operating costs are now on the rise and such reserves are now depleted.