Malta should embrace plans by the G7 club of wealthy nations to introduce a global minimum corporate tax and “find a new role for itself in the world”, Repubblika activist and journalist Manuel Delia has argued.
In an article on Sunday Times of Malta, Delia described Malta’s economic model which uses low taxes as an incentivise for foreign investment as an “ancien régime”.
“Without challenging the acquired dogma that the government should have no role in economic activity that private investment can do better, the dry years of austerity, the ineffective response to climate change, the public resources that needed to be mobilised to manage a pandemic remind us that we need government too,” he wrote.
“Economies large and small, sophisticated and lagging need renewed infrastructure to enable communication, transportation, distribution and energy.”
“Governments need the financial resources to build ahead of the economy’s needs. The vision required must be of a grand scale. We can’t merely fix what’s broken. We need a new, sustainable and green economy that reverses climate degradation.”
“We can raise our angry fists at these realities of the changing world and stubbornly cling to an economic model that, like slavery or textiles, is past its date, or we can get real, be part of the global deal for reform and find a new role for ourselves in the world.”
He played down warning that higher corporation taxation rates will lead to a decline in competitiveness, arguing that this train of thought could justify slavery on the grounds that it reduces labour costs.
And he drew parallels between the proposed taxation changes to past changes in international minimum standards on trade that hit Malta’s economy.
“For some time, we raised our fists angrily at the realities of the world. For decades, we blindly subsidised shipyards that had no hope of ever becoming viable economic activities,” he wrote. “We played blame games as factories sowing denim or underwear and shoes of dubious quality shut down their doors.”
“When we focused on reinventing ourselves and reimagining ways of rebuilding our economies and when we caught up with what was happening in the world around us, we managed reasonably well.”
Delia said Malta should forget about resisting these proposed changes and instead “ride the wave and lead the revolution”, which will entail “building a new and sustainable green economy” and “rebuilding our infrastructure for more sustainable and ecologically sensitive times”.
Last week, G7 nations and the EU agreed in principle to set a global minimum corporate tax rate of 15% and make companies pay more in the countries in which they operate.
While Malta has a corporate tax rate of 35%, its full imputation system allows foreign businesses to benefit from significant rebates on dividends.
Malta has yet to pronounce itself on these G7 proposals. However, last February, Finance Minister Clyde Caruana admitted that Malta was left with only three EU allies – Ireland, Cyprus and Luxembourg – in its resistance to EU-wide minimum taxation levels and that the island must be open to implementing changes favouring tax transparency.