Prime Minister Robert Abela has declared that the latest budget reinforces the Labour government’s commitment to families and continued economic progress.
During a political address, Abela emphasized that the budget delivers on promises, allocating €120 million to increase social benefits. This is the largest increase in social benefits in history. All tax payers shall collectively benefit from a significant tax cut worth €160 million. Students shall benefit from a 15% rise in stipends.
PM Abela explained that the government has managed to reduce taxes yet at the same time government is increasing its revenue. The increase in revenue is being redistributed to the people. He stated that this economic policy supports everyone, maintaining existing measures while introducing new ones. He emphasized that families, regardless of whether they have children, will consistently benefit under a Labour government. He noted that the tax cuts mean families will not pay tax on their first €1,000 of monthly income. Families shall continue to benefit from the energy subsidies the Labour government has introduced.

The Nationalist Party has put forward a proposal for a tax cut that would have excluded 30,000 families with one child. This proposal is highly inferior to the tax cut that shall be introduced as a result of this budget.
Pension increases were also highlighted, with PM Abela promising substantial annual increases to compensate for past reductions under the GonziPN administration. He cited an example of a Gozitan pensioner who will receive an extra €25 per week due to corrections made for those born before 1962.
PM Abela contrasted Malta’s approach with that of other European countries, where tax increases and pension freezes are being implemented. He quoted Eurostat figures showing stagnant economic growth in Europe, particularly in Germany and Italy. He also pointed to the UK, where tax hikes are being considered to fund public services.
In contrast, Abela stated that Malta will significantly reduce taxes and increase pensions, with pensioners receiving more than double the COLA (cost of living adjustment) from next year. In addition to tax relief and increased benefits for families, the government will continue to invest in healthcare sports including facilities in Gozo, and education.
The Labour government, over and above the hefty increases in social benefits, energy subsidies and the introduction of tax cuts, has allocated €1.1 billion in capital expenditure for the 2026 budget.
Addressing claims about government spending, PMAbela countered that the Nationalist Party was wrong to say the budget cut capital expenditure. He clarified that the government has allocated €1.1 billion for the coming year, which is three times more than what previous Nationalist administrations had allocated. He also mentioned the €100 million in incentives for families and businesses to invest in artificial intelligence.
Finally, he spoke about Vision Malta 2050, noting that over 400 organizations participated in the consultation process, but the Nationalist Party did not contribute, even with extended deadlines. He questioned the Nationalist Party’s commitment to the country’s future.