Last Updated on Monday, 8 June, 2020 at 8:46 pm by Andre Camilleri
The government is presenting a multi-million ‘mini-budget’ aimed at helping the economy recover from the effects of the Covid-19 pandemic.
The budget includes measures that affect the economy directly, as well as others aimed at helping families return to normal consumption levels.
The theme is ‘Ghada Ahjar’ (a better tomorrow).
The budget is being unveiled by Prime Minister Robert Abela, Finance Minister Edward Scicluna and Economy Minister Silvio Schembri.
“Three months ago, the world was hit by an unprecedented situation,” Abela said.
“Everything we had worked for over the years was in jeopardy. The predictions were shocking – both the figures about deaths and unemployment. But we did not let ourselves be controlled by these predictions. We had to work hard to arrive where we are now, to ensure that these predictions would not come true.”
“We had to introduce measures to protect our people, but which affected our quality of life. All measures were proportionate. Had we not taken these measures we would not be here today. Had we decided to go for a full lockdown, we would today have a stagnated economy.”
Abela said the priorities were to safeguard public health and jobs. A number of measures were introduced to sustain jobs. “We wanted to ensure that the country would be up and running as soon as the pandemic subsided. That moment is now.”
This strong regeneration plan is built on three pillars. The first, now that we have reopened our businesses, we want to help them reduce their expenses. The second, to give a push to domestic demand. With the third, we will give direct assistance to industry and incentivise work.
The wage supplement scheme – the government’s biggest source of financial aid for those affected by the pandemic – will continue to at least September, although some industries will see the amount of money they receive per month per employee reduced.
Under the current system, businesses were separated across two annexes – with the hardest hit being categorized under Annex A and receiving €800 per month per employee, and the lesser hit being categorized under Annex B and receiving €160 per month per employee. That system will run until the end of this month.
From then, the wage supplement scheme will be split across three strands. Hotels, the entertainment industry, travel agencies, language schools, and airlines will continue to receive the €800 per month per employee as before, but the majority of the remaining businesses categorized under Annex A will see the supplement reduced to €600 per month per employee.
Other businesses which are now open and receiving clients but were on Annex A owing to the fact that they had closed down, will be categorized under Annex B, meaning that they will receive €160 per month per employee.
Under this arrangement, the wage supplement will be extended to the end of September.
There were two anomalies: pensioners who had an alternate means of income and students who have a stipend were excluded from the wage supplement scheme. They will now also be entitled to it.
Two further measures were revealed for which all businesses categorized in one of the Annexes – irrespective under which Annex they fall – can take advantage of.
The first is a one-time cash subsidy of the electricity bill which the businesses will receive over the course of July, August, and September. The subsidy will be of either 50% of the bill, or up to a maximum of €1,500.
The second is a similar one-time cash subsidy on rent. Businesses can apply for up to €2,500 in a cash subsidy to help in covering rent costs for the months of July, August, and September. In all, these two subsidies together are expected to cost the government €80 million.
The property market will see significant attention as well, with the stamp duty for both the property buyer and seller being reduced. The stamp duty for the buyer will go from 5% to 1.5% while the stamp duty for the seller will go from 8% to 5%.
The deduction will be made on all property purchases below €400,000.
This will be applicable for all contracts signed up until March 2021, and will also apply to those buying property under the first-time buyer scheme.
Meanwhile, the first-time buyer scheme itself will be expanded in such a manner that those who bought property before the scheme was introduced in 2013 and were hence not eligible, will now be eligible for the scheme.
The first-time buyer scheme means that the first €175,000 of the purchase is tax-free.
In another significant measure, all those living in Malta who are over 16 years of age will be receiving €100 worth of vouchers in the post. €80 of these will be redeemable at outlets such as restaurants and bars, while the reminder can be used at retail outlets which recently re-opened. The vouchers will be valid until the end of September. Businesses will be given a refund by government.
As from Monday 15 June, fuel prices will be reduced by 7 cents per litre. This means that the price of petrol will go from €1.41 per litre to €1.34 per litre, and the price of diesel will go from €1.28 per litre to €1.21 per litre.
In terms of measures directly affecting businesses, the tax deferrals announced last March will continue until the end of August. These deferrals have to be paid back by May 2021, with no interest fees.
Tax refunds. For the third consecutive year, full-time and part-time workers will be receiving their tax refund cheques. 210,000 workers will benefit from this refund, which will cost the state coffers €11.5 million. A family with two working parents will be receiving an average of €328 between the refund and the voucher.
In more of a social measure meanwhile, the in-work benefit will see both its threshold and rate increase. A special supplement of €250 per family will also be given to those eligible at a cost of €4 million.
Meanwhile, a measure for those who should have been tying the knot in the past few months but had to cancel their weddings due to the outbreak of the pandemic was also revealed. Under this measure, couples will be eligible to receive €2,000 from the government in order to help them cover expenses which they had already paid. This scheme has a maximum take-up of €2 million.
A separate fund of €3 million will be opened for Voluntary Organisations in particular whose income has dried up as a result of the pandemic, while another €2 million will be allocated to helping homes for the elderly, whose wage bill exploded due to the fact that they went into lockdown with their staff living inside the homes for the benefit of their patients.
Several measures on a more economic level have been announced as well.
Firstly, it is being assured that the Malta Development Bank will step in to under-write any bonds which are not sold when these mature.
Tax credits received as part of the Malta Enterprise micro-invest scheme can also be transferred into cash grants. Up to 30% of these credits can be changed into a cash grant which runs to a maximum of €2,000 or €2,500 if the business is based in Gozo.
License fees, such as MTA and Commerce Department licenses, meanwhile will also be waived, with businesses saving a cumulative total of €5 million as a result of this measure.
Malta Enterprise will also be running a scheme to help companies re-engineer and re-structure their business models, with €5,000 per business being reserved for consultancy services in this regard.
The Skills Development Scheme will meanwhile also see an increase of €5 million in its budget. All in all, the three aforementioned measures are expected to cost in the region of €12.5 million.
Trade Malta will also have a €400,000 budget to refund expenses of up to €10,000 which companies undertook to promote their product or service digitally abroad.
Those people or businesses who were going to attend an international trade fair which was cancelled because of Covid-19 will receive an 80% refund.
Meanwhile, the government will be refunding 33% of the port charges for ships which import goods to Malta but are not in trans-shipment, and refunding 10% of the same charges for those which export goods from Malta but are not in trans-shipment.
Malta Enterprise, through the Malta Development Bank will also be allocating €10 million to make good for guarantees on exports, while €4 million will also be reserved for the construction industry so that contractors can modernize their machinery. They can receive up to €200,000 each.
A fund of €5 million will also be allocated to local businesses for them to advertise their local products while it was announced that the government will be announcing its Low Carbon Development Strategy next October.
Worth a grand total of €900 million, the measures have three main aims; to help businesses now that they have opened but have done so with less of a turnover, to incentivize consumption again, and to secure Malta’s supply chain and increase its productivity.
No less than €400 million – equivalent to 3% of Malta’s GDP – will be spent across a number of years to strengthen the country’s productivity.