Malta is sticking to its guns over its refusal to back the proposed EU financial transaction tax if this does not apply globally.
If Internal Market Commissioner Michel Barnier’s main mission to Malta last week was to change the government’s mind over the matter, he failed.
The island has since reiterated its opposition more forcefully. Addressing his EU counterparts this week, Foreign Affairs Minister Tonio Borg said: “Let me make it clear for another time on the Commission’s persistent demands to introduce the financial transaction tax. We continue to oppose this measure if this is not introduced on a global level.”
Malta’s financial services sector has flourished over the past few years so it does not like the idea of only taxing financial transactions that take place in the EU, as this could push players to non-taxed jurisdictions.
The same position is being adopted by the UK – which is home to the EU’s largest financial services hub in London. The Commission is selling the idea as a new way of financing the EU budget.
During meetings held in Malta last week, Commissioner Barnier pleaded with Malta change tack, saying the tax would not really have a big impact. However, the government stood firm.
Dr Borg then voiced opposition during a meeting in Brussels dedicated to negotiations over the next seven-year budget of the EU (2014-2020). He also reiterated Malta’s request to be given additional funds in the next budget for statistical reasons.
According to EU rules, only member states with a GDP of less than 75 per cent of the average are eligible for the highest funding.
However, Malta and other “new” member states are arguing that they have seen their GDP surpass this threshold only after the EU included as members Romania and Bulgaria – both poor countries which have unbalanced the EU-27’s average GDP.
This issue is one of the crucial battles Malta expects to fight over the next budget.
Preparing for this clash with the EU’s net contributors, who want to slash spending, Malta has officially joined an informal group of 13 EU member states known as the “Friends of Cohesion”, demanding that EU funds remain at the same level as allocated to them in the current period covering 2007-2013.
During this period, Malta is expected to rake in a billion euros in EU funds – mainly to be used for infrastructural projects.