Muscat: 'tax harmonisation no solution to eurozone crisis'

Opposition leader Joseph Muscat disagrees with tax harmonization as the solution to the crisis being faced by the eurozone, as France's and Germany's leaders prepare to rewrite the Treaty establishing the rules for the euro currency zone.

Prime Minister Lawrence Gonzi yesterday said France and Germany's proposal of a new treaty to address the eurozone crisis should be only implemented if all other measures fail. "If there is need of a change in the treaty for the eurozone to recuperate and avoid having member states that do not comply with the stability act, then we are ready to contribute," Gonzi said.

"However, we are more in favour of reaching these objectives without changing the treaty. Malta does not believe the current problem will prolong. What it needs are immediate solutions."

On his part, Labour leader Joseph Muscat said his party will wait for concrete proposals to be put forward.

"Just one month after Europe's conservative establishment declared it found a solution to the crisis, it is now coming up with yet another solution. We will be awaiting the concrete proposals being put forward. What is for certain is that tax harmonization is neither the solution to the Eurozone woes, nor it is in Malta's best interest."

In a leaked report for the EU summit that begins Thursday, European Council president Herman Van Rompuy is proposing a "genuine fiscal union" to coordinate economic policies and ensure a higher degree of surveillance and discipline in the conduct of national policies.

The interim report by Van Rompuy calls for each eurozone member's budget deficit to remain below 3% of gross domestic product and national debt under 60%; the obligation for national laws to guarantee balanced budgets in the medium term; the European Financial Stability Facility being given a banking licence so that it can borrow money from the European Central Bank (ECB); and giving the power to the European Commission to impose austerity measures automatically on countries which require bailouts.

UK Prime Minister David Cameron has said he will not sign a new treaty without safeguards to protect the financial interests of the City of London and Britain's role in the European single market.

Earlier this week, Standard & Poor's put all eurozone nations on credit watch "with negative implications".

The ratings agency said the decision was prompted "by our belief that systemic stresses in the eurozone have risen in recent weeks to the extent that they now put downward pressure on the credit standing of the eurozone as a whole."