Sant warns EU tax harmonisation not in Malta’s interests

Labour MEP and former Prime Minister Alfred Sant told the European Parliament that EU tax harmonisation goes against the interests of Malta and other peripheral regions and islands with limited endowments within the European Union.

Sant made this statement in an explanation of vote while the European Parliament was discussing the 'Preparation of the Commission Work Programme 2016.' He said that the Commission Work Programme 2016 rightly defines as an important objective the elimination of rampant tax evasion and avoidance, as well as aggressive tax planning by multinational corporations. Measures that, in a transparent and consistent manner, seek to attain this goal in the context of a level playing field are desirable.

He warned that a serious problem arises when the measures contemplated to eliminate rampant tax evasion go beyond the stated objective and prepare the ground for tax harmonisation.

“This goes against the interest of peripheral regions and islands within the Union,” he said. “When adopting European regulations they have among others, removed protective trade barriers, adopted consumption taxes that follow continental models, phased out state aid, adopted stringent budgetary rules, abandoned exchange rate autonomy. This has severely curtailed their competitivity. The only element that remains for them to safeguard it is fair tax competition.’

He said that the resolution on the Commission Work Programme for 2016 endorses a mandatory common consolidated tax base and that in current circumstances, these proposals amount to a first substantial step towards harmonisation.

“They are hugely detrimental to the development prospects of islands and regions at the periphery of the Union and I cannot approve them,” Sant told the European Parliament.

The resolution was passed with 408 votes in favour, 182 against and  23 abstentions. Sant voted in favour on the final vote of the resolution but he voted against the paragraph mentioning the setting up of a mandatory common consolidated tax base.