The Maltese delegation at the European Parliament is united in its resistance to the introduction of any tax harmonisation that would adversely affect Malta’s competitive edge.

Nationalist MEP Roberta Metsola and Labour MEP Alfred Sant agreed that any consolidated common tax base would have a disproportionate impact on smaller economies like Malta’s.

The proposed tax amendments would be detrimental to the country and the two MEPs would push to ensure they were not implemented.

Metsola and Sant were speaking on Monday during a webinar organised by the European Parliament to shed light on the administrative, legal and political issues related to the stalled EU budget and Malta.

A revamped version of the EU’s multiannual budget (MFF) was presented in May by the European Commission after the previous one was stalled at European Council level since 2018.

The MFF was linked to a recovery and resilience package to help EU member states cushion the impact the COVID-19 pandemic had on their economies.

Last July, EU leaders spent four days trying to reach a compromise on the final deal, which was tied to rule-of-law conditions for member states. However, Poland and Hungary have put a spanner in the works by objecting.

Metsola said there would be no backpaddling on rule-of-law conditionality because “The EU is not an ATM”. It was time, she said, for the EU to put its money where its mouth is.

She noted there had been significant developments regarding the sources of revenue for the EU budget. However, one had to ensure the amendments did not damage the competitiveness of small niche economies like Malta’s.

Common consolidated tax bases become complicated. We must be wary

“When we talk of funds raised from emissions it is one thing, but common consolidated tax bases become more complicated. This is why we must be wary,” she said.

“Like other governments get their own standpoints, I have no doubt that the whole EP delegation here will be united to ensure that the burden on Malta is not disproportionate.”

Sant said: “The large majority in the EP want tax harmonisation in order to avoid tax avoidance. We are against all tax avoidance but on the other hand we should push for tax transparency rather than harmonisation.

“If we get this, there will be no need for tax harmonisation. Financial services in Malta do not facilitate tax avoidance,” he said.

Other speakers who addressed the webinar, although not in their official capacity as EU officials, said that although time was running out and the deadline would be tight to implement the budget by the beginning of the new year, there was still time for this to happen.

“We’re running out of time and while it will be challenging, we can make it happen,” one speaker said.

According to the EU treaty, the EU could end up issuing monthly budgets to keep the European economy functioning.

However, the webinar heard warnings of “interruptions” in new EU programmes because most of the present programme expires on December 31.

“There’s no contingency in place if no agreement is reached. We can still make it but we are already late in terms of continuity,” one other speaker said.

Robert Camilleri, from the Finance Ministry, said the virus pandemic had strengthened Malta’s argument that it wanted a special allocation as a member state.

Unlike other countries, it could not rely on internal tourism to help with its economy, he pointed out.

Parliamentary secretary Stefan Zrinzo Azzopardi said Malta badly needed the European Union funds to continue investing in projects that would regenerate its economy as well as funds from the recovery package to counter the effects of the novel corona-virus pandemic.

Independent journalism costs money. Support Times of Malta for the price of a coffee.

Support Us