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Government’s economic plans revolve around its political circle – Gavin Gulia and Charles Mangion Addressing a political activity this morning, Gulia and Labour MP Charles Mangion, reiterated that the budget follows a regular pattern. “The first three years are very difficult, at time including austerity measures. But in the fourth year of the legislature the budget softens down, easing burdens and signing collective agreements,” both MPs said. The first budget after the election, they said, would be filled with measures to bring back what he promised to give in the previous budget. “Each year, the people are denied €40 million each time he promises to reduce the income tax but then the promise is not fulfilled,”Gulia stated, calculating that in three years the population is denied €140 million. "We have been hearing about this reduction in every budget." Commenting on last Monday’s Budget, both MPs said “the Budget has not addressed the local market.” “The largest part of the economic growth was created by profits in the financial sector. In real economy, the largest part of these profits is not being enjoyed locally as most of the banks and financial companies are foreign,” they said. “The measures which will be applied next year, like SISA on fuel, the electricity and water bills which have not been addressed, the cement levy and the VAT increase on accommodation, will only make it difficult for the local economy to prosper,” Gulia said. “At the end of the day, it will be the consumers and families who will carry the burden.” Referring to the VAT increase on accommodation, Mangion said “government has been irresponsible.” The Labour MP said even though tourism was good this year , this does not mean that next year will be the same. “In view of rising problems abroad, it has been irresponsible of government to increase the VAT knowing well that, for example, the number of tourists coming from England might diminish.” Mangion also described the Budget as “an accounting exercise, delivered by an accountant”. Each year, he explained, government tries to bring his balances to term, each year trying to address the deficit, each year resulting in “miscalculations”. “Every year, in every budget, the Prime Minister repeats that thanks to the measures put forward the economy will grow by a certain percentage, and at the end of the year this amount would be far less than what was promised,” he stated, adding that we have for long heard about the setting up of committees to address and control government’s spending. “However, these all remain at the stage of discussion with no concrete and positive action taking place.” Referring to the cash- in-hands issue, Mangion stressed government could have created a small measure to try and reduce even a small part of the citizen’s cost. “During 2010 and 2011, government will be saving €40 million from the Malta Shipyard and €80 million from water and electricity subsidies,” Mangion said. “In total, government has €120 million in savings of which a small part could have been used to ease a small part of the burdens carried by the consumer.” Consumers decreasing their spending only leads to reduced competition and decrease in investment, he said. Mangion said adding value is not enough.”For the economy to grow we need a skilled workforce. Investing in education is not enough. Government must ascertain it is investing in quality,” he said referring to statistics which show that Malta has the highest percentage of people dropping out of school at a young age and a high percentage of unskilled workforce.