Labour MEP Alfred Sant has abstained in a European Parliament vote on a proposal for a directive on disclosure of income tax information by certain undertakings and branches, arguing that EU member states having limited endowments, especially if situated at the periphery, must rely on tax flexibility to promote economic activity.  

“I abstained on this motion because it has the effect of promoting EU common policies in favour of tax harmonisation. Declarations made repeatedly during its preparation confirm that this is one of the intentions behind it, going beyond the need -- with which I agree -- to curb tax abuses and money laundering,” the former prime minister said in a statement.  

Dr Sant said that different member states of the European Union have different endowments, while being subject to common rules regarding tariffs, excise duties, VAT, competition policies as well as (for eurozone members) strict budgetary management of debt and deficits. The fact that they must balance their books under eurozone rules ensured that their tax and spend regimes operated competitively under conditions comparable overall to those of their fellow members.

Moreover, the low limits proposed to the turnover of companies that would be subject to income and profit reporting, discriminated against the smaller economies.

He said that due to the country’s size, relatively low turnover by such companies soon spills over into cross-border trade, making them liable to the proposed reporting rules -- something which would take longer to happen in the bigger economies.

The proposal was approved with 534 votes in favour, 98 against and 62 abstentions.