Malta disagrees with suggestions to introduce EU-wide taxes to finance the next seven-year budget, although a government spokesman has said it is open to discussions on the contentious subject.
The European Commission is mulling the introduction of EU-wide taxes, including a separate VAT system, to fund its €132 billion annual budget between 2014 and 2020. Talks are expected to take place among EU member states next year.
The current EU budgetary period, known as the financial perspectives, comes to an end in 2013. The Commission has tabled a budget review with suggestions on how the EU should try to move away from national contributions by member states and instead have its own independent financing system through the introduction of EU-wide taxes.
Among the suggestions, the Commission said member states’ contributions could be reduced by abolishing the own resource funding based on a share of VAT and introducing a new system. These may include “a share of a tax on financial transactions or activities, a share of the proceeds of auctioning greenhouse- gas emissions allowances, a tax on air travel, a separate VAT rate, an energy tax or an EU corporation tax”.
The formal proposals, expected to be submitted by the middle of next year, have already been met with scepticism by the biggest EU member states. Germany, France and the UK have already declared their opposition to the introduction of EU taxes, fearing this will give more power to Brussels while taking away more of their sovereignty. Many other member states also oppose the idea.
“Malta is in principle against the introduction of EU taxes,” a government spokesman has said.
“However, these suggestions from the Commission serve as a basis for the discussions to be held in which we will participate fully and give our own reactions.”
The EU budget is financed by member states through contributions from their own national coffers. These include a mix of contributions based on a country’s GNI (76 per cent of total revenue), import duties (12 per cent of total revenue) and a levy on national VAT receipts (11 per cent of total revenue).
The Commission is now arguing this system, which led to “bitter debates about net contribution” and a “complex system of rebates”, has passed its expiry date and a new way of financing should be explored in order for the EU to respond more rapidly to the global circumstances.
Under the EU budget (2007- 2013), Malta is among the net beneficiaries, meaning it contributes much less than it receives from the EU. Between 2004 and 2009, Malta got €310 million more than it contributed.
However, this may not be the case next time round as talks on the 2014-2020 budget will also have to determine whether Malta will qualify to remain a net beneficiary.