Labour MEP refutes tax claim by Lawrence Gonzi

Labour MEP Edward Scicluna is denying having ever suggested increasing taxation to reduce the national debt.

The economist was responding to claims by Prime Minister Lawrence Gonzi raised in his speech to PN delegates at the party's general council last week, during his 'ten questions' to Joseph Muscat, in which he claimed Scicluna stated the need for taxes to increase.

"I strongly refute this claim which is completely baseless and just a ploy to deflect attention," Scicluna said in a statement. "I challenge the Prime Minister to quote the exact words I said which in his fertile imagination he construed as my having advised taxation increases on industry at this time of our economic situation."

Referring to a recent appearance on Bondiplus, Scicluna said Finance Minister Tonio Fenech was visibly prompting presenter Lou Bondì to ask whether the MEP was in favour of the cost of extended maternity leave to National Insurance (NI).

"With continued badgering on this point I continued repeating several times that this burden already exists on industry, so no new burdens are being suggested. Sharing an existing burden does not add any taxes or NI. It is one way to make the existing burden lighter on the employers. Being solely an employers' matter, it is obvious that this would have to be solved among themselves, and not imposed by the government," Scicluna said, who has argued in favour of extending maternity leave to EU norms.

"It is very obvious that the government is getting hysterical because it is in a tight spot. The situation we are now in is the accumulation of many past economic mistakes.

"It will be more worthwhile for the Prime Minister to heed European Commissioner Olli Rehn's warning letter where the government by December has to show that its fiscal measures are 'sufficient', 'permanent', and 'convincing'," Scicluna said.

European Union Economic and Monetary Affairs Commissioner Olli Rehn has warned five EU member states, Malta included, to speed up their deficit-cutting efforts or face sanctions.

Belgium, Cyprus, Hungary, Malta and Poland need to provide "convincing evidence of permanent fiscal measures and preferably full 2012 budgets" by mid-December, Rehn told reporters today in Brussels.

The latest autumn forecast from the European Commission's autumn forecast says Malta's deficit is expected to widen to 3.5% of GDP in 2012 and 3.6% of GDP in 2013, with the primary balance turning negative again. General government gross debt increased to 69% of GDP in 2010 and is expected to rise slightly further, reaching 71.5% of GDP in 2013, mainly reflecting the deterioration in the primary balance.

In a reaction, the PN said Scicluna had on previous occasions repeatedly stated his preference for increase in taxes, health fees and reductions on university stipends. "His most recent one was on PBS last Thursday where he said everyone should be taxed to offset the increase in maternity leave."

The PN also said that on 7 September, 2008, Scicluna criticised the government for its relucatance to touch the stipends system. "Scicluna said that if dockyard workers had been sacred cows for a government that feared them, a similar situation existed at the university, with government scared to touch the stipends."

The PN said Scicluna had said the health, education and social benefit sectors had to return to sustainable levels.

The party also quoted a report in Business Today oif 12 October 2006, citing a report by the economist for the Federation of Industry prior to Budget 2006. "This report quotes Scicluna saying there was no country in the world that paid students Lm8.3 million from the education vote for cars, mobiles and recreation. The report says these stipends should be issued as loans."

Scicluna denied the contents of the PN statement, in a reaction last evening. "The PN is quoting my words out of context. I deny having made any proposal to increase taxation."