EU summit: new tax proposals next week

Malta will be watching closely next week as the European Commission is expected to publish a new proposal to introduce a Financial Transaction Tax (FTT) on an enhanced cooperation basis.

Speaking at the end of a two-day summit in Brussels, Commission President Jose Manuel Barroso yesterday announced that following the decision of 11 EU member states to bring in an FTT, the Commission will publish a new proposal with the aim of introducing new legislation as soon as possible.

Although Malta has made it clear that it is against an FTT and will not join countries introducing this tax, Maltese diplomats will have to see whether it will be bring future obligations on the island through the back door.

Malta’s attention will have to be even more focused since – following the forced resignation of John Dalli – its Commissioner will not be at the table of the college of commissioners when the proposal’s text is discussed before its publication.

Like the majority of member states, Malta is against the introduction of an FTT in Europe if this is not first introduced on a global level. Malta has a large financial sector compared with its economy and fears losing many international companies if an EU-level tax is introduced.

After the summit, EU leaders agreed on the way forward to create a banking union, with the first phase being the establishment of a single supervisory body to look into the business of some 6,000 banks in the eurozone.

According to the summit’s conclusions, legal aspects of the supervisory authority should be agreed by January 1 so that operational implementation could take place during the year.

The ECB will gain powers to supervise banks in the EU, although there will be a separation between its monetary and supervisory aspects.

Leaders also discussed proposals to deepen the economic and monetary union and agreed that a final report on the way forward should be presented in December by the President of the European Council, Herman van Rompuy.

Prime Minister Lawrence Gonzi yesterday welcomed the bank supervision deal and said Malta is committed to more economic integration.

All eyes are now on the next summit in November, when member states will try to reach a deal on the seven-year EU budget covering 2014 to 2020.

Malta will have to fight tooth and nail to keep the level of funding it has managed to acquire during the current period.

The EU is split between the contributors – who want to freeze any increase in spending – and beneficiaries like Malta, who want to continue to benefit as much as possible from the EU’s coffers.

For the current period, 2007-2013, Malta managed to obtain €855 million in EU funds.