Moves towards tax harmonisation undermined the competitiveness of the small peripheral economies of the European Union, former Prime Minister Alfred Sant told the European Parliament yesterday that

Dr Sant said that the control of taxation policy was the only real tool left by which small EU member states could retain flexibility for competitive purposes. Dr Sant made an explanation of hid vote before voting against the report ‘Rules against certain tax avoidance practices’. 

 “My vote against this report follows similar votes on the same subject in past months. I fully understand the need to control the wide range of practices by which taxes are being evaded by individuals and companies, large and small, as revealed by Luxleaks and the Panama papers scandal,” he said.

Dr Sant said he supported all measures meant to increase transparency in taxation affairs. But such measures should not end up infringing the existing right of EU states to retain sovereignty over their tax systems.

 “It seems to me that the proposals made in this report open the door fully to further follow-ups that can only lead to tax harmonisation within the EU. With this I cannot agree, for it would serve to increase the growing structural divergences between the central EU economy and the small peripheral economies of the Union.

“For these economies, taxation policy, which they still control, is the only real tool left by which to retain flexibility for competitive purposes. All others they have given up, customs protection, budgetary flexibility in public budgeting, the setting of VAT and excise, state aid policy, exchange rate. Moves towards harmonisation of income and profit taxes will only further undermine their competitiveness,” Dr Sant said.

The report was approved 486 voting in favour, 88 against and 103 abstentions.