But then, just two paras down, the author quotes ‘sound economic theory’ to argue that income tax cuts – whilst reducing government revenues in the short term – would increase government income in the longer-term.

Selective use of theory to fit particular arguments is symptomatic of people who think they are economists. The lack of a byline only emphasises the author’s insecurity.

[Daphne – It has nothing to do with insecurity, believe me. And the person who wrote it is not an economist.]

The UK, France, Italy, Greece and Spain constitute a formidable political bloc within the EU. Let’s see if they respect regulations that will harm their economies in the short term.

The major advocate for fiscal restraint is Germany and it seems to be losing.

Do you read the papers? Or is it a case of me misinterpreting things?

Albert, it was not only Gonzi who dangled carrots in front of the gullible electorate. The MLP came out with bigger carrots dangled in front of us , like cutting the electricity bills by half.

So yes I may agree with you that this ‘carrot’ will be ‘eaten’ in the last budget. But like me you can foresee that it is attainable, and I, like you, can foresee this ‘script’.

Now, imagine for a moment,what the MLP’s “cutting the bills by half carrot” would have meant. It would have meant that the middle class would pay more taxes to subsidise the bills of the rich amongst others, and instead of reducing the income tax we would have suffered an increase.

No one would bother to invest in alternative energy and no one would give a hoot if the water heaters and ACs were left running all day long, our power station would experience an increase in demand and we will be told that Gonzi PN did not think ahead for a new power station.

In the meantime we would have been fed double the BS GonziPN fed us, while we experience power cuts.

Albert, we’ve been through all this predictable ‘script’ under Mintoff, Karmenu Mifsud Bonnici and Dr Alfred Sant. We were told by Mintoff himself that he was not able to bring employment to Malta, (who would dare do such a thing with a scarecrow like him in government?).

We have been told by Alfred Sant that Mater Dei hospital would be demolished (gebla gebla), and he doubled the amount of beds and changed it from an acute to a general hospital. Labour also promised the removal of VAT and cash registers and we got CET instead with a bigger ‘hofra’.

In the 80s KMB promised employment and we got 7,000 employed with the government entities on the eve of the 1987 elections.
Dr Joseph is not the material for an opposition leader, let alone for a prime minister.

Voters should vote for Dr Muscat not because Gonzi did not materialise some promise in his third budget, but because he can convince us that he knows a better way to bring us better paying jobs.

If there only would have been Dr George Abela at the helm of the MLP, we would have been arguing (and maybe agreeing) at a very higher level.

If “he is not morally convinced of his approach,” then that makes him different from Alfred Sant also.

We’re interested in the songs not who the singers are. If one reads a good argument, it remains a good argument no matter who wrote it.

The Nationalist governments lowered income tax on a number of occasions with the desired effect. Timing is the key word here. It should be borne in mind that the promise to lower income tax came concurrently with another promise, that is to turn the deficit into a surplus.

After the election the government had two choices open to it, either to attempt to reduce the deficit at all costs or to help prop up a number of floundering companies. The government wisely opted for the latter. If and when the deficit is reined in, reducing tax will become an option.

It will not be the government that will be determining when the finances are sound but official statistics issued by the EU. Should this come about on the eve of an election then tough on Labour.

Any tax cuts at this point would increase the fiscal deficit, and would increase the public borrowing which, according to economists, can “crowd out” private sector investment.

In other words, investors will be attracted to placing their cash with the government for the interest return on its public borrowing, rather than investing in the real economy.

Is it possible that Joseph Muscat’s economic consultants do not tell him this?

Tax cuts in a weak recovery, which is what we are experiencing, will not result in a growth of the economy, because putting more cash in the hands of scared investors will just find itself back into government bonds – see the trend of international stock and capital markets, and government bond yields, in the past year.

People were scared of corporate equity investments and placed their investments in bonds.

In particular, since the international economy is still weak, demand for our exports and for our property is weak. Therefore, tax incentives will not be spent in paying overtime or additional production capacity, but will just be hoarded until confidence returns.

If this article was headlined by the Times or Maltastar, a question mark would be put at the end.

Daphne,

So true and so sad. To think that I went to sixth form with the guy. At that point I was already dreaming “EU”. Was he already planning his singleminded attempt to achieve “greatness”? It didn’t look like it.

As for the EU membership issue, Mr “I-want-to-run-this-country-at all-costs” had a single bullet-point in his agenda: oppose the Nationalists on whatever stance they take.

However he’s not morally convinced of his approach, and this is what makes him different from Mintoff. One day he will see what a fool he made of himself.

Albert with all due respect, this is not a question of what Gonzi or Muscat promise or say but it’s a question of one’s maturity to objectively assess who is making sense and who is not in the context we’re living in.

I understand the emotional frustration of an ideological Labourite wishing his party to be in power, but that should have suggest a rational decision when the triad was chosen! Joseph was never fit for the job – the other two even less.