Robert Abela Dismisses Joseph Muscat’s Call To Cut Taxes: ‘Look At What Happened To Liz Truss’

Robert Abela Dismisses Joseph Muscat’s Call To Cut Taxes: ‘Look At What Happened To Liz Truss’

Updated: 3 months, 10 hours, 22 minutes, 28 seconds ago

Prime Minister Robert Abela has played down a call by his predecessor Joseph Muscat to cut taxes for the private sector, arguing that such a strategy played out extremely poorly in the United Kingdom.

In a recent interview with Lovin Malta, Muscat was asked what the government should have done differently in the past two years since he was forced to resign as Prime Minister.

“[It should have] taken more decisions, especially when it comes to investment,” Muscat responded. “You need to incentivise the private sector to invest more, you need to be bold in your decisions. I’m not saying this for the first time but I do urge government to be bolder in its decisions when it comes to economic growth. It’s the only way to keep moving forward.”

Asked for a concrete example, Muscat said he would have definitely tried to reduce taxes further “in one way or the other”.

When questioned about Muscat’s statement in an interview with Times of Malta, Abela played down the proposal, claiming his predecessor was speaking about a situation before the COVID-19 pandemic and the war in Ukraine.

“I don’t want to compare and contrast, but look at what happened in the UK when Liz Truss tried to lower taxes for the people who earn the most. She only survived 44 days in the role,” he said.

“I’m not saying lowering taxes is not a good idea. It is, but when I suggested it to [Finance Minister] Clyde Caruana, he advised against it, in a context where the European Central Bank is spiking interest rates to battle inflation. But we still raised tax brackets for pensioners.”

Malta’s corporate tax rate currently stands at 35%, one of the highest rates in the world, although its imputation system allows foreign businesses to take advantage of significant rebates.

In its election manifesto, the PL pledged to reduce corporate tax to 25% for the first €250,000 in profits. Abela stuck to this promise in his new interview, stating there are four more budgets to go in the current legislature.

“We wouldn’t have been prudent had we implemented them now,” he argued.

Finance Minister Clyde Caruana

Finance Minister Clyde Caruana

Finance Minister Clyde Caruana last month said that Malta must adopt a new economic model and shift from pursuing rapid economic growth towards focusing on improving people’s quality of life.

“If we stick with the same recipe, then instead of spending one hour in traffic to get to work, we will start spending one and a half hours or two hours. We will keep building hotels but beds won’t be filled. It is clear that the recipe of the past can’t apply to the future,” he warned.

However, in his Lovin Malta interview, Muscat urged the government not to abandon its current economic model.

“I think that the answer to most of the prevails of any economy is still economic growth,” he said. “If anything, the problem we might be having right now as a country is that we’re not pursuing economic growth but there seems to be the idea that we have to stop.”

“You cannot stop, you have to keep on moving forward. I refute the idea that quality of life has diminished because of economic growth. If anything, all opinion polls have shown during my tenure – and I believe even now – that people were and are better off at the end of the day.”

“Economic growth has given us a war chest that has taken us through Covid where we were one of the very few countries that hadn’t suffered because of government money. Our policies made it possible for us to implement a freeze on energy prices while other countries are suffering.”

Cover photo: Left: Prime Minister Robert Abela, Right: Former Prime Minister Joseph Muscat, Inset: Former UK Prime Minister Liz Truss

Should Malta adopt a new economic model? Tim DiaconoTim is interested in the rapid evolution of human society brought about by technological advances. He’s passionate about justice, human rights and cutting-edge political debates. You can follow him on Twitter at @timdiacono or reach out to him at

Tim is interested in the rapid evolution of human society brought about by technological advances. He’s passionate about justice, human rights and cutting-edge political debates. You can follow him on Twitter at @timdiacono or reach out to him at [email protected]

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