The board of the Gibraltar Chamber of Commerce has considered the Chief Minister’s budget speech. Overall, the Chamber is pleased that the Government has listened to persistent requests by the Chamber to rein in spending and not give in to repeated requests for ever-rising recurrent expenditure, particularly when based on borrowing as this is unsustainable.
The Chamber is heartened by the increased forecast in GDP to 7.5 per cent per annum for the year 2022-23. This is a return to the annual growth trend seen over the last 15 years or so.
On one level Gibraltar is blessed to have virtually zero unemployment and to have achieved record levels of registered jobs so soon after the ravages of the COVID pandemic. However, the reasons for this magnificent economic performance are largely due to Gibraltar’s private sector. This was recognised by the Chief Minister in his speech. The private sector which has had to rebuild its finances after the pandemic. This said there are many businesses that have still not recovered to pre-pandemic levels and are faced with ever increasing costs and in an environment of high interest rates to boot.
The increases in the minimum wage, income tax, corporation tax and social insurance which the Government introduced last year have been instrumental in transforming Gibraltar’s public finances. These increases fell mostly on the private sector.
As governments elsewhere continue to cut budgets and impose higher taxes, Gibraltar has continued to defy the odds. Unlike elsewhere, Gibraltar’s citizens are extremely fortunate to be able to enjoy many services for free: Free medical care, free school and university education, free bus services, free sports facilities, subsidised utilities, and rent-protected housing for many. All of this has been made possible by the taxes paid in the main by the private sector.
The Chamber questions the need to give tax free bonuses to civil servants in the higher income brackets. What difference will £600 make to someone who is already paid £8,000/month? This money could have been better used to further help those lower paid hard-working families who are genuinely experiencing economic hardship. This was a missed opportunity.
The Chamber welcomes that there will be no increases in water or electricity charges which will benefit businesses and citizens alike.
The Chamber also welcomes the reduction in ETB registration fees although retaining the registration cost of £8.60 for each new employee might cost more to administer than it raises in fees. We also welcome the ETB being given discretion to waive the £15 penalty for not respecting the 10-day vacancy period, but would prefer it to be scrapped altogether. This is an administrative nuisance for many employers who need to hire staff quickly and it is hard to understand why businesses should be penalised for creating jobs.
Care with future expenditure needs to continue if Gibraltar’s competitive position is to be maintained. The outcome of the current discussions on the treaty is far from certain. The Chamber urges the Government to maintain a business-friendly environment so that our economy can continue to grow and develop. If this is lost either by government bureaucracy or through increases in business costs, the risk is that businesses might move elsewhere.
Gibraltar’s private sector has generated considerable revenues for the Government to redistribute over the years. The Government needs to ensure that the money it raises in taxes is spent or invested in the best possible way to achieve the maximum benefit where it is needed most.
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