Maltese MEPs last week voted against a European Parliament resolution de-nouncing Malta and six other EU countries as tax havens.

[attach id=708228 size="medium" align="right"]“Twenty years ago the families of people who worked at the drydocks genuinely believed it was in the national interest to continue to subsidise the ’yards.”[/attach]

The hard-hitting report is the result of a year’s work by the parliament’s committee on financial crime and tax evasion, and its findings should have been a boon to any attempts by the Nationalists to score political points.

The report criticised Maltese politicians for their exposure to corruption and money-laundering, and the country’s institutions for not doing anything to stop them.

PN MEPs have been campaigning on these issues for years, and right they were to continue campaigning even as their own party appeared to lose interest. They were also right to rebut charges that they were betraying the national interest, quite rightly appreciating the distinction between nation and prime minister.

But even principled and upstanding PN MEPs could not find it in themselves to vote with the majority view that our “aggressive” tax regime undermines the European project and diverts tax revenues away from the governments whose resources are spent by the businesses that pay them.

We perceive our ability to discriminate between residents and non-residents when paying out tax refunds to business owners as “the national interest” and no mainstream politician is willing to cross the line and question that dogma.

That’s no reason not to examine our conscience a little bit.

After all “this is how we make our living” and “this is our daily bread” is how a serial bandit justifies persisting in a career of crime. An expert thief will genuinely wonder if they could be half as good at any other job, and they would definitely worry that their income would have to take a hit while adapting to some legitimate activity.

This rationale is the one we’re using to respond to the criticism of the European Parliament and of the rest of the world. Add to it the plea that we’re too small to be picked on and you get an even clearer picture of the game we’re playing.

It is not a game we invented.

For decades Switzerland justified banking secrecy in this way. Switzerland is a small country precariously perched on cliff-sides and mountain tops. Surely it cannot be expected to earn its keep from chocolate and clock-making. Accepting gold stolen from the Jews was the country’s protection from the greed of the Nazis.

The fact of the matter is that there’s a point where these justifications ring hollow.

It is in the ‘national interest,’ I suppose, to generate wealth beyond the restraints of the geological lottery of natural resources. But even ignoring the detail that we belong to the rest of the world, piles of cash are a very narrow interpretation of what the national interest really is.

Here we seem to be confusing the national interest with compound interest, to borrow a phrase.

Although many in Malta earn a living from international finance, this by no means applies to everyone. When Malta had to transition itself out of heavy industry, thousands of people who earned their keep from building timber barges or mending oil tankers refused to accept the facts. Thousands of families depended on salaries paid by the dockyards and an economy without them was unimaginable.

To the point where illogical policies were kept up to kick the can of inevitability further down the road. A huge share of the nation’s resources were consumed in protecting and subsidising an industry whose unofficiated funeral was decades in the past.

We seem to be confusing the national interest with compound interest, to borrow a phrase

The sort of international banking we are providing now does not ask for subsidies. On the contrary it pours money into the national exchequer, removing even the incentive of unbalanced budgets to spur governments and political parties into the realisation, slow as is their habit, that change is necessary.

But our financial ‘industry’ does demand of the country irrational policies to keep it in place. I’ll mention a few we have accumulated over time.

We tell the world it is our right to have a lower tax base ostensibly because we are more efficient than the lumbering French, Italian or even Scandinavian economies. But of course we are lying to them and ourselves. At 35 per cent, our corporate tax rate for real local businesses (owned by people who actually live here and depend on the local infrastructure to function) is perfectly comparable with that of other European countries.

Therefore our massive fiscal discounts for non-residents, where we end up charging them less than five per cent, is not the product of some economic miracle or particularly lean public administration, but because it costs us nothing to issue them with a bill.

We should stop marvelling at our ability to sell something at a fraction of the price that our competitors charge when we are selling stolen goods.

Although I do not mean to suggest that people providing these financial services from Malta do not burn the candle at both ends to earn their living, our general economic outlook has been numbed by the profits this business generates. Innovation remains a rarity and our formal education remains woefully below par.

Being small and peripheral should be pushing us to sharpen our competitive edge. Instead we are losing even our ability to speak English properly and Italian has become a geriatric memory.

That happens when dependence on an economic model bloats us into believing its self-perpetuation is guaranteed.

Here is a third odd policy this dependence has driven us into. We started out by venturing into being off-shore cowboys until our aspiration to join the EU made us rank our choices, sacrifice the cowboy status and align our financial services to civil standards.

Not all of us are quite like Alfred Sant, still nostalgic for a banana republic status that is frankly closer to Brexiteer pyromania than any enlightened European political idea. But even the more progressive among our politicians somehow feel it is their duty to vote against some obvious glaring mistakes.

The European Parliament voted on a motion for a European anti-money laundering agency, which is the most obvious prescription if you have diagnosed our FIAU as a cover for money-launderers. They voted on a motion for a European financial police force, which we clearly need when all we have to protect us from financial fraudsters is a thin blue line manned by the police commissioner who does it when his busy schedule watching football at roadside diners allows.

Our MEPs voted against that motion, claiming to be acting in the national interest. That may be what they believe. Twenty years ago the families of people who worked at the drydocks genuinely believed it was in the national interest to continue to subsidise the ’yards.

But it was not, and eventually those families came to understand it was not even in their narrow personal interest to do so. They were postponing the adventure that would be the rest of their life.

Donald Trump’s promises of a renaissance for the industrial rust belt, the Brexiteers’ dream of reviving a mythical golden age of blessed isolationism: these are popular policies because nostalgia is a remarkable galvaniser of voting intentions.

But just because we look away from the future, it does not mean it is not going to happen anyway.

This is a Times of Malta print opinion piece