For Muscat, the Labour Party will always be ‘the underdog’

It was his favourite description of the Labour Party in the run-up to the 2013 general elections, and four years – and a 36,000-vote majority – later, leader Joseph Muscat still believes his party remains the underdog.

“We’re always the underdog,” Muscat told a news conference on Tuesday morning, when asked about polls that favoured his party to win the 3 June elections.

Why? “Just read the front pages [of newspapers],” he quipped.

He was replying to questions by reporters following the delivery of the Labour Party’s proposals for businesses.

During the press conference, Muscat was also asked whether he would urge the electorate to vote against corruption: “Of course I do.”

The daily presentation of new proposals for different sectors by the Labour Party has not taken the attention away from the Panama Papers revelations.

Reiterating that it was “politically insensitive” for minister Konrad Mizzi to open an offshore company, Muscat insisted that – offshore or not – the most important thing for a Cabinet member would be that of declaring their assets.

“The lessons learnt from Panama Papers are clear: I believe that you need to declare all you have, and discuss them. The discussion should be about countries outside Malta, irrespective of whether they’re offshore or not. Transparency remains the most important point.

Muscat added that it would have been extremely wrong if the companies had not been declared, rendering their position “unsustainable”.

“It was politically insensitive to set up a company there [in Panama],” he said.

The European Commission’s country specific report

In its country specific recommendations for Malta, the European Commission on Monday focused on the island’s financial system which attracts a number of foreign institutions, most notably due to its favourable tax environment.

“Malta is the only EU Member State utilising the full imputation system  of  company  taxation  and it offers a refundable tax credit scheme. It has an extensive network of double taxation treaties, and it has an attractive tax residency status for individuals.

“The supervision of the internationally-oriented business, however, is challenging. The financial sector carries out most of its activities outside Malta.  The ability of a relatively small supervisory authority to oversee a large system, in particular in the insurance sector but also in banking, is under pressure.”

Reacting, Muscat noted that, as opposed to past years, the European Commission was changing its recommendations for Malta which meant the country was addressing the recommendations put forward by the EU.

He argued that this year, the European Commission was giving special attention to taxation and financial matters across the member states, with recommendations to other countries to improve their tax collection system.

“Likewise, it told other countries to beef up their authorities. I don’t think that the issue of attracting foreign interest is critical.”

Muscat also added that, contrary to recommendations made to three other countries, “nowhere does the European Commission mention corruption in its report on Malta”.

Proposals for businesses

• Increase the Micro Invest scheme from €30,000 to €50,000 for businesses based in Malta; up to €70,000 for those companies where the majority of shareholders are women, for self-employed women and for businesses in Gozo.
• Transfer of shares to founders of startups will be tax exempt
• Tax exemption on VAT for small enterprises will go up to €20,000
• Update rent laws to give more legal power to tenants
• Tax incentives for companies who introduce voluntary pension for their employees
• Introduce fiscal measures for companies who offer shares to their employees
• €50,000 tax deduction for companies who offer childcare facilities
• Tax incentives up to €20,000 for companies who introduce telework or flexible hours
• Up to 75% tax credit for companies that offer Gozitan workers teleworking and up to €10,000 salary refund for companies employ Gozitans
• Fiscal schemes incentivizing contractors who invest in new machinery with low emissions
• Companies who relocate to Gozo will be tax exempt for three years and their relocation expenses will be covered