Tax Harmonisation Is The Biggest EU Issue Facing Malta: Here’s What Local MEP Candidates Had To Say
The possibility of a minimum 18% corporate tax rate is high on the agenda of EU Commission President Candidate Frans Timmermans
Tax harmonisation is under the microscope once again after one of the leading candidates for EU Commission President Frans Timmermans said the would pursue a minimum 18% tax rate across the EU.
In a country where partisan tribalism is the name of the game, it's becoming more important to pull our focus away from local issues and begin taking notice of policies that can have a massive effect on Malta.
Adding an extra layer to the debate on a local level, Malta’s Labour Party forms part of the political grouping pushing for Timmermans election, the Party of European Socialists.
Also concerning is that Manfred Weber, the candidate of the European People Party (of which the PN is a member) strayed from the EPP's manifesto position by saying he would push the introduction of a qualified majority voting in relation to some "special fields" of taxation.
"Generally I believe in tax competition, but in special fields like digital taxation we need a common EU role," Weber said.
Lovin Malta sent questions to some of Malta’s leading MEP candidates to get their perspective and understand what they can do to ensure the island’s voice is heard on the European stage. Here’s what they had to say:
Peter Agius (PN): "How can the Labour Party change things on an EU level if they can’t convince PES to change manifesto?"
"Timmermans speaking about the harmonised 18% corporate tax rate at the very start of speech shows that it is at the very top of the socialists’ agenda. It is their top priority.
We need to work hard to mould our Europe and ensure that our position is truly heard. We cannot let the extreme positions of the socialists become a reality. Can you imagine what will happen to Malta’s competitive edge in the igaming and financial services sector?
Labour Party MEPs have voted against tax harmonisation in the EP so far, but if they can’t even convince the Party of European Socialists to change a manifesto, how can the Labour Party change anything on an EU-level?
EPP candidate Manfred Weber’s plan on issues surrounding tax is less of an issue for Malta. He mentioned a digital tax of 2% on all digital companies that earn over €600 million in turnover per year. This proposal was voted in the Council of Ministers in February who decided to put the dossier at OECD level hence translating into no particular impact on Malta's competitiveness."
Alfred Sant (PL): "Weber’s position on qualified majority voting is more dangerous"
"During the same debate being quoted, the head of the EPP delegation Manfred Weber stated that he would push for a change to qualified majority voting on corporate tax and other issues, something that would totally jeopardise Malta's position of full autonomy on tax matters. It would then open the door for proposals like that of Timmermans that he would push for an 18 per cent minimum corporate tax rate.
Weber's position is therefore much more dangerous for Maltese interests than Timmermans' for it will have the backing of the EPP which is likely to be the largest political family in the EP. The PN has already voted in favour of Weber's position, and no doubt will back him again on it in the future. Labour has already voted consistently in the EP against the positions of both Weber and Timmermans and will continue to do so come rain, come shine."
Roberta Metsola (PN): "Tax harmonisation will place a disproportionate burden on Malta"
"The Socialist Party has, once again, confirmed its commitment to pushing for European tax harmonisation. We will continue to oppose it as the PN delegation has always done in the European Parliament.
Europe is not one homogeneous entity, a one-size-fits-all approach, particularly on tax matters, simply does not work. Tax harmonisation will mean an enormously disproportionate burden placed on smaller economies like Malta. Our tax system predates our entry into the EU, and we will keep defending Malta's right to legislate in this area. Tax is a Member State competence, and we cannot accept that principle comes under threat.
It's a pity that the Labour Party were unable to convince their Socialist Group on this point who have made this their central pledge in the new legislature."
Miriam Dalli: "PN Voted Against Retaining Unanimity In European Parliament"
"As I always did in the past five years, I will continue defending Malta’s taxation system, including the principle whereby taxation is decided by the individual country and thus a Member State competence. I will continue supporting the principle of unanimity. I will continue to push for and vote in a manner that ensures that Malta’s taxation system is safeguarded.
As recently as on the 26th March 2019, the European Parliament voted on a report that included amendments stressing the importance of unanimity voting on matters related to taxation. I, together with all the PL delegation, voted in favour, whereas the PN members in the European Parliament voted against retaining unanimity.
Partit Laburista does not back any proposals aimed at harmonizing taxation, and this position was communicated within the PES structures when the manifesto was drafted. Taxation is a matter of national competence, and we want it to remain that way."
Mina Tolu (AD): "If PL withdraws endorsement of Timmermans, PN should do the same for Weber"
"Tax harmonisation is one thing every MEP candidate in Malta is against. It’s clear we all agree to a certain extent that tax harmonisation will be extremely harmful for a small country like ours.
Timmermans’ proposal would take away some advantages from us and make us less competitive in terms of an economic model that has been created and supported by PN and Pl governments over the year. I feel that right now, this will be extremely harmful to our economy.
However, if we say the PL should withdraw its endorsement of Timmermans, then we can similarly say the PN should withdraw its endorsement of Weber because he also has some very problematic positions. He didn’t attend a debate organised by the European Youth Forum, which is extremely disrespectful of youths, and he and his German political party are pushing policies that are in danger of the planet. This contradicts with the PN’s stance that they support youth and want to fight climate change.
The beauty of the EU is in all compromises you can reach. I’m sure that the S&D isn’t cohesively in favour of tax harmonisation and that some of its members, besides Malta, will fight to keep this advantage. I won’t take it for granted that if Timmermans becomes European Commission President, tax harmonisation will be introduced."
Cyrus Engerer (PL): "We need to present a united front rather than fight between ourselves"
"Even Weber said he would support a common rule of tax; he just didn’t mention figures like Timmermans. All this proves is that we need to present a united front when defending in Malta rather than always trying to fight against the country and our own MEPs. On the subject, the treaties are clear and will not allow anything that is being proposed. I was more worried about Weber saying that he will remove our unanimity in the EU Council.
The Labour Party’s position has always been clear to ensure that our views on a corporate tax base we will be defended and respected. Ultimately, we are a country with no resources beyond our competitiveness in the field."
Francis Zammit Dimech (PN): "Labour will only make Timmermans stronger to fulfil his pledge"
"Tax advantages are vital to attracting economic activity to Malta’s shores. It is one tool to partly compensate for the natural and permanent disadvantages of Malta’s insularity and peripherality and ensures competitiveness in particular for the financial services and gaming sector. These sectors per se provide job opportunities and benefits to several Maltese and their families. In fact, thousands of other people depend on these sectors through accommodation and entertainment, among others.
The pledge of the socialist’s candidate for President of the European Commission Frans Timmermans of implementing a standard (one size fits all) corporate tax across the EU is thus worrying. This is not scaremongering. Timmerman’s statements are worrying for all of us and a vote for labour will only make Timmermans stronger and in a position to fulfil his pledge that will have a huge negative impact on Malta.
As Chairperson of the Committee for Foreign Affairs within the Maltese Parliament, I worked on a report that clearly expressed objection to such policies. When elected at the European Parliament, I tabled amendments to ensure that company law legislation would not impose any tax restrictions. I always voted against a European corporate tax and I will continue to do so.
During negotiations for EU accession, the PN government had ensured that tax-related matters should remain of national competence. We will continue to defend this right in the interest of our citizens. This is crucial to continue offering high-quality jobs for our youths."
David Casa (PN): 'Labour MEPs have been completely ineffective in safeguarding Malta's interests'
"The Socialists need to understand that we are not ready to budge an inch when it comes to our taxation system. We will continue to vehemently defend our position just as we have always done.
Tax harmonisation - in whichever form it takes is unacceptable. This is largely a matter for the member states to decide. The current system cannot be changed without the Maltese government agreeing to it.
It is hugely disappointing that Joseph Muscat flew to Madrid and endorsed a manifesto that calls specifically for tax harmonisation. It is even more disappointing that Labour MEPs have had such little influence and credibility over the last legislature that they have been completely ineffective in safeguarding Malta’s interests and arguing for Malta’s position. This will not change in the next 5 years."
Michael Briguglio (PN) : 'Muscat said he endorses Timmermans' manifesto'
Timmermans said black on white that he wants tax harmonisation. Joseph Muscat said that he endorses Timmermans' manifesto. Weber on the other hand did not propose tax harmonisation and the PN says black on white in its manifesto that its elected MEPs will keep supporting tax sovereignty in the interest of workers and the country's strategic needs.
PN Candidate Frank Psaila, PN Candidate Michael Briguglio, PL candidates Josianne Cutajar and Alex Agius Saliba, Independent Candidate Arnold Cassola and Democratic Party Candidate Camilla Applegren did not reply to questions by the time of publication.