Malta is not interested in participating in any form of EU enhanced cooperation on the controversial Financial Transaction Tax, Finance Minister Tonio Fenech has told The Times Business.
It is not in our interest to have this kind of inefficient tax
Mr Fenech made his comments after a meeting of EU Finance Ministers in Brussels on Tuesday.
He said although Malta will not object to the use of this methodology, its participation was completely ruled out.
As it becomes increasingly clear that the Commission’s proposal does not stand a chance of gaining the green light from all 27 member states – a requirement for the tax’s adoption – Germany and France are already toying with the idea of introducing the proposal on an enhanced cooperation system.
This mechanism, allowed under the EU Treaty, gives a minimum of nine member states the possibility to advance in their integration in a particular area within the EU structures, but without the other members being involved.
Divorce and patent legislation fall under a similar mechanism.
Asked whether Malta agreed with this alternative, Mr Fenech said that although Malta does not object to the use of this mechanism for the FTT, he categorically excluded the possibility that Malta will participate in it.
“Our position on the FTT is clear. We believe that it is not in our interest to have this kind of inefficient tax which will harm our competitiveness and jobs,” he said.
“If there are member states which want to take this risk and introduce this tax themselves they can do so. However, Malta won’t be a part of this mechanism.”
Malta and other opposing member states – including the UK, Sweden and Luxembourg – argue that if the FTT is introduced only at an EU level rather than globally, many financial services companies operating in the EU will relocate their business to other countries.
Sources yesterday told The Times Business enhanced cooperation in this field will only act as a new pull factor for financial service operators towards EU member states like Malta which will not participate.
“If Germany introduces an FTT and the UK doesn’t, companies in Germany will obviously migrate to the UK or other countries which do not have an FTT regime,” the sources said. “Enhanced cooperation might be even beneficial to Malta’s financial services sector.”
Experiments with FTT in the past have failed.
According to Swedish Finance Minister Andreas Borg, Sweden has had a bad experience when it decided to go it alone and introduce the tax.
Despite the clear divergence in positions between member states, the Commission and the Presidency will keep pushing on – at least for now.
Denmark’s Finance Minister Margrethe Vestager announced that at the next policy debate on the FTT, possibly at the May or June Ecofin Council, there will be attempts “to see whether alternatives to this tax might make achievable the objective” of higher taxation of the financial sector.
On his part, Taxation Commissioner Algirdas Semeta agreed to carry out another “thorough study” on the economic impact of the tax.