Prime Minister Lawrence Gonzi again called for prudence and caution about the situation in Libya which, he said, was changing by the hour and was becoming more serious.
Speaking in Parliament yesterday following a ministerial statement on the meetings of the European Council extraordinary and the Eurozone heads of state, Dr Gonzi said the government was focused on Libya but one should not forget what was happening in Yemen and Bahrain.
“The whole continent is going through a massive experience,” he said
Fielding questions by the opposition, Dr Gonzi said Parliament had risen to the occasion on this matter and the government was doing its duty by giving priority to national interests and security.
Malta had acted on all the points listed in the UN Security Council resolution, including the freezing of assets. The situation was of direct relevance to Malta which also showed solidarity with the Libyan people.
Dr Gonzi accused Alfred Sant of not being fair with him and with the House over taking him to task for not making the statement last week. The Prime Minister said he had made a statement on Libya when the crisis erupted and had kept the ministers and the Leader of Opposition informed.
Dr Gonzi agreed with the proposals by George Vella calling for the setting up of an EU ad hoc committee and other structures to monitor development aid and progress in human rights records of recipient countries. It was not easy to transport democracy to other countries where institution building was still lacking.
Answering Anġlu Farrugia, deputy leader of the Labour Party, he said that on Malta’s insistence, the EU statement included a clause on burden sharing with the EU committing itself to help countries faced with migration because of the present circumstances in the Mediterranean.
When referring to questions by the Leader of the Opposition, Joseph Muscat, Alfred Sant and Charles Mangion, Dr Gonzi denied that the competitiveness pact would affect the Cost of Living Adjustment (COLA) mechanism because Malta had the advantage of having a system where salaries and wages were adjusted according to the cost of living increase as established with the social partners. This meant that the lowest-paid and the highest wage earners received the same increase. Other countries had a different mechanism based on percentages causing some of them to lose their competitiveness. The system of collective bargaining was very strong in Malta.
Dr Gonzi said the EU treaty established that direct taxation remained a national competence. Tax harmonisation and the competitiveness pact should be taken in this context.
Malta was clear and categorical on this in the eurozone summit.
Tax harmonisation as drafted in the common consolidated corporate tax base had nothing to do with tax rates. The issue was on addressing how to tax profits from parent and subsidiary companies without diluting a country’s revenue. He said that on Malta’s insistence, the final declaration included a clause that this could be put into practice as long as it was revenue neutral for governments.
The competitiveness pact was of an advantage to Malta because the single market increased competitiveness. The European Stability Mechanism (ESM) aimed at preventing economic collapse as happened in the recent past. This should result in a system that provided incentives to increase competitiveness.
The council rejected Ireland’s claim to renegotiate the borrowing agreement exactly because other countries could not dictate the Irish tax rates.
The final declaration was different from what the French and German governments had proposed.
The summit conclusion assisted in calming down the international markets and brought some stability.
The ESM also established that in future the private sector would have to shoulder its responsibilities in cases of countries passing through a financial crisis, Dr Gonzi said.