Malta yesterday held out against the introduction of an EU Financial Transaction Tax even as 11 other eurozone countries agreed to move forward with the proposal on their own.
We have no intention of joining this initiative in the foreseeable future as it is not in our national interest
The island stood fellow euro area states Cyprus, Finland, Ireland, Luxembourg and the Netherlands in deciding to stay out of an “enhanced cooperation system” on the tax.
Austria, Belgium, Estonia, Greece, Italy, Portugal, Slovakia, Slovenia and Spain joined Germany and France in invoking a provision in the EU Treaties that allows a minimum of nine Member States to go it alone in a given area.
The decision was taken at a meeting of EU Finance Ministers (Ecofin) in Luxembourg yesterday.
Taking note that 11 Member States had accepted to introduce the tax, the European Commission said it would now present a new proposal “as soon as possible”.
Malta does not want to introduce the tax, which it sees as a threat to its flourishing financial services sector. The UK, which is not in the eurozone, has adopted a similar stand.
On the other hand, Malta has no intention of stopping those countries that want to introduce the financial transaction tax, Finance Minister Tonio Fenech told The Times yesterday.
“However, although we still need to see the precise details of the proposal, we have no intention of joining this initiative in the foreseeable future as it is not in our national interest.”
Asked whether peer pressure on Malta would increase now that the majority of members of the euro area were on board, Mr Fenech said “Malta will continue to resist.”
“We are not against an FTT if introduced globally. But it doesn’t make sense for us if it is introduced only in the EU as this will drive our business away to countries where there is no FTT,” he said.
There are still many grey areas which need to be explained. For instance, the original proposal was that the proceeds of this tax would go towards the EU budget.
“This can’t really be done if not all member states are contributing,” a source argued however.
The Commission, which is a prime promoter of the FTT, had proposed to tax stock and bond transactions at 0.1 per cent and derivatives at 0.01 per cent.
It will also have to come out with an economic impact assessment of the new system when it tables its new proposal.