Prime Minister Lawrence Gonzi yesterday told EU leaders Malta would never agree to common coordination of certain fiscal areas, particularly taxation.
The EU cannot force us on this as the (taxation proposals) aren’t legally binding
Summing up the conclusions of the EU summit in Brussels yesterday, Dr Gonzi said that although Malta agreed with more integration in certain economic and monetary aspects, it would never accept losing its control over taxation.
“We agree on the broad conclusions of the EU’s vision to have more coordination in certain economic areas but we have our reservations on a fiscal union, particularly with regard to taxation. This is a no-go area for us and we will not agree to lose control over this important aspect of our economy,” he insisted.
Over the past weeks, Malta had already resisted attempts by Brussels to interfere in the “sacred” area of taxation policy.
Following a proposal to introduce an EU-wide financial transaction tax, Malta, together with a number of other EU countries, blocked the proposal.
The Prime Minister’s declaration yesterday came after the publication of a new blueprint by the President of the European Council, Herman Van Rompuy, which suggested a long-term plan to have an economic, fiscal and monetary union.
At the end of long hours of negotiations, mostly during the early hours yesterday, EU leaders had made little concrete progress on the new vision and only agreed on its broad aspects.
Mr Van Rompuy has now been asked by EU leaders to prepare a more specific road map for the next EU summit scheduled for October.
Malta also stood its ground over two of the six country-specific recommendations (CSRs) made to the island, suggesting raising the retirement age and revamping the wages indexation, known as the cost of living adjustment (COLA) mechanism. Malta registered its reservation though a formal declaration.
“We feel that the Commission’s assessment is wrong and we won’t be touching pensions and COLA,” the Prime Minister insisted.
Asked what will happen if the Commission does not change its position and Malta is outvoted at the Ecofin Council in July – where the CSRs are decided on – Dr Gonzi said: “Malta will not implement them.
“Our position is clear. The EU cannot force us on this because these recommendations are not legally binding.”
EU sources said that although Malta had been insisting on the need to change the text of the recommendations for weeks, it was very unlikely that this would happen.
“It is very difficult for the Commission to change its position as this may be interpreted as a sign of weakness by other member states,” a senior EU official said.
“These conclusions are approved by qualified majority and we feel that there is already a majority in favour.”
During their meeting, EU leaders agreed on more short-term measures aimed at further assuring the money markets on the sustainability of the euro.
Prompted by Italy and Spain – both currently under intense pressure due to rising borrowing costs – eurozone member states agreed, among other things, on the possibility of banks using the EU’s bailout funds to recapitalise; assistance through the same funds to bond buying by member states observing rigid debt and deficit reduction rules; and the creation of a single supervisory mechanism involving the European Central Bank.