Muscat says government must have both fiscal discipline and flexibility

In a reaction to the European summit, Opposition leader Joseph Muscat said the Labour Party is committed towards fiscal discipline, where the taxpayer's money is used with prudence, and government's aim is consistently towards a balanced budget and reducing debt.

"We understand the need for our laws to have mechanisms which ensure such discipline. But we also need to see our government can operate in realistic space when special circumstances, such as recession, arise.

"During his coming inter-governmental discussions, I urge the Prime Minister to assure that that such flexibility can be practised," Muscat said.

He added the Labour Party's position is a clear message a "New Government assures stability in the change of our country".

Muscat said he sees the wider role of the European Central Bank as a positive step, even though he has reserves on how much international markets will look at this agreement as a solution to the current uncertainty.

He also expressed concern at the mandate given to the European Council for the preparation of the report about better fiscal integration.

"As leader of the Opposition I reiterate my support to government. But I will stop supporting it if the red line of tax harmonisation is skipped. In other words, decisions on tax should be taken by the Maltese government," Muscat said.

"Any attempts to create a Common Consolidated Corporate Tax Base, which would ruin our country's competitiveness in financial services, must be resisted. In the same way, there shouldn't be agreements on the introduction of the Financial Transaction Tax which would hinder our country's economy."

Muscat said government must not support the EC's report if it leads to the two points which go against national interest and remove the flexibility which Malta needs.

Muscat reiterated the only credible way to reduce deficit is economic growth. Malta and Europe should focus on action in favour of economic and job growth, he said.

"The debt created by others can onl be solved with the creation of jobs and wealth," Muscat said, adding he did not want the future generations suffering from yesterday's and today's debts.