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raphael_vassallo
Raphael Vassallo

Malta is the target here, not Muscat

When Nationalist MEPs encourage their European partners to ‘get tough’ with Malta over tax evasion is to assist in the dismantling of a favourable tax system that they themselves created in the first place

raphael_vassallo
Raphael Vassallo
20 June 2017, 7:30am
To jeer an outgoing US President at his final Sate of the Union address would be perceived as the ultimate act of disloyalty to the Constitution
To jeer an outgoing US President at his final Sate of the Union address would be perceived as the ultimate act of disloyalty to the Constitution
Some years back – it must have been 2008, so already almost a decade ago – I happened to watch former US president George W. Bush’s last-ever State of the Union address on TV. I won’t bore you with what it was all about; to be honest, I can’t even remember now. What intrigued me, however, was the reaction he was getting from his audience.

Back then, Bush’s approval rating as US President was at an all-time low: not just vis-a-vis his own previous record over eight years in the role... but compared to any US President in living memory. (Note: his record has since been beaten, but at the time it was unprecedented.)

But you would never guess any of that just by watching his speech. There were moments the President struggled to get a word in, as his every sentence was drowned out by ecstatic applause. Among those egging him on the loudest was Nancy Pelosi: the Democrat Party’s House Leader, and until that moment, George Bush’s sternest critic in every other theatre of politics.

But not here; not on this occasion. And OK, I’ll grant you there may be a very simple explanation. It was, after all, George Bush’s last ever speech as US President. The applause could be interpreted as a pre-emptive celebration of his inevitable political demise.

But I was not convinced at the time, and remain unconvinced to this day. Beyond the festive atmosphere there was also an unmistakable note of sincerity. The cheering was motivated by what seemed to be a profound sense of respect. Clearly, this could not have been directed towards Bush in person – not, at least, so unanimously. My guess is that part of this display of seeming approval was directed, not at the man at all... but at the office he still held. 

Later, I found myself interviewing two US ambassadors in quick succession: Molly Bordonaro, the outgoing Republican appointee; and Gina Abercrombie-Winstanley, her Obama-appointed replacement. As with all interviews, there were moments of off-the-record chit-chat beforehand... and I took the opportunity to ask both for their opinion of the above scenario. 

In different words, they both said more or less exactly the same thing. No matter how fierce or bitterly contentious the issues that separate the two sides may be... all differences are invariably put aside, when it comes to formalities celebrating American democracy as a whole.

To jeer an outgoing US President at his final State of the Union address, I was told, would be perceived as the ultimate act of disloyalty to the Constitution. The identity of the President becomes irrelevant at such moments; it is what he represents that counts.

With hindsight, I realise it is also a curious American foible that often gets lampooned and satirised. There is, perhaps, an inherent sense of hypocrisy underpinning such a blatant travesty; maybe the Americans overdo their public displays of (clearly feigned) patriotic emotion.  

But there is undeniably also something admirable in being able to rise above political differences in the name of a common interest: especially when that ‘interest’ involves love for one’s own country. And it becomes all that more appealing, when you compare it to the clean opposite scenario: basically, the scenario that reigns in Malta at the moment, and which seems to be getting steadily worse each year.

The so-called ‘grilling’ of Joseph Muscat by the PANA committee this week was a classic case in point. There is a level at which we tend to forget that ‘Joseph Muscat’ is not merely ‘Joseph Muscat’ when he addresses the European Parliament, or any comparable international forum, in his capacity as Maltese prime minister. Whatever we may think of the man and his government at local level, the fact remains that he represents the country as a whole in the eyes of the rest of the world.

The same, of course, would be equally true if we were talking about Lawrence Gonzi in his own day; or Eddie Fenech Adami before him; or any Maltese prime minister, past, present or future. It has nothing to do with whether Labour or the PN happens to be in power. These distinctions are in fact utterly meaningless to anyone who is not Maltese. Most European observers (if there were any at all) would not even be aware of Muscat’s political orientation; to them, he is simply a figurehead for the member state he happens to officially represent. Whatever conclusions they reach will not be about the Malta Labour Party... or the Nationalist Party, for that matter. At this level, partisan distinctions fall by the wayside. Only the name ‘Malta’ will stick... together with all the mud that has been gleefully thrown at it by its own MEPs.

There is, in brief, a marked lack of anything resembling a spirit of collegiality among our representatives in Brussels. I would not go so far as to use the word ‘traitor’ or ‘treachery’ to describe it... both those words are woefully inaccurate. But there is nonetheless a certain wilful disregard for the harm these people cause by sullying their country’s name on the international stage. Speaking only for myself, I find it painful to watch.

I find it painful at the best of times. In this particular debate, however, it was more excruciating than usual.

There are two reasons for this. The first is that around 90% of the arguments (and insults) brought up against Malta by members of the PANA committee were based solely on corruption allegations that: a) are to date unproven; b) come from highly suspect sources, and; c) are still under a formal judicial investigative process here in Malta. For the life of me I cannot understand how MEPs like Werner Langen and Ana Gomez can unilaterally appoint themselves judge, jury and executioner, in a case that has yet to be formally decided at law. 

But that’s a minor detail. The real problem, as I see it, is that the entire ‘Panama’ issue was actually a smokescreen for something far more insidious and sinister. This may come as a surprise to many out there – not least, the Maltese MEPs who led the anti-Malta cavalcade – but if there was a defendant in the dock during that debate... it was not Joseph Muscat. Nor was it Konrad Mizzi or Keith Schembri. On the contrary, it was Malta’s taxation regime. And I need hardly add that Malta’s taxation regime was not designed by Muscat or the Labour Party; it was actually designed and implemented by the Nationalists themselves.

This brings us to the most glaring anomaly in the PN MEPs’ respective positions during that debate. Listening to their speeches, you’d think that the only thing at all objectionable with our taxation system is the fact that it is currently administered by a Labour government. As though a simple change in government – without any corresponding changes to the system itself – would be enough to set all wrongs right.

No offence, but that is a ridiculous argument even by the abysmally low standards of local political debate... let alone at international level. Do these people seriously think European MEPs give a toss whether it is a Nationalist or Labour government that undercuts their own countries’ tax rates... thus diverting into our economy tax money that would otherwise go into their own coffers instead?

Of course not. What much of Europe finds objectionable about our taxation regime (and not just ours) is that – once all the rebates and various incentives come into play – foreign companies registering in Malta end up paying only 5% in income tax. This translates into a bonanza of foreign investment for Malta... but at a cost to other European economies, which now struggle to finance their own social services. Efforts are therefore underway at European level to clamp down on what is elsewhere perceived as ‘unfair tax competition’... and you can rest assured those efforts will continue, regardless of whether the party in government is Labour or PN. 

So when Nationalist MEPs encourage their European partners to ‘get tough’ with Malta over tax evasion... what they are effectively doing is assisting in the dismantling of a favourable tax system that they themselves created in the first place. Ironically, it is also the same tax system they claim to want to defend... indeed, to be the only party capable of defending it.

Sorry, folks, but you can’t do both. At this point, our representatives in Europe should really decide whose side they are on. Do they want to retain Malta’s current taxation system? Or do they agree with the arguments raised in that debate: i.e., that Malta should ‘fall in line’ with European taxation norms, and revise our rates according to some form of ‘harmonised’ system?

Unless the PN has changed its position while I wasn’t looking, the answer should be the former. Officially, on paper, the Nationalists oppose any attempt at European tax harmonisation. They can pontificate all they like... but the dirty little system they now love to berate in public was all along their own brainchild. And without it, they know perfectly well we would go directly back to being the mediocre little economy that forever struggles to keep its head above water. 

So what’s it going to be, folks? Are you going to fight to preserve Malta’s tax sovereignty, like you always said you would? Or, in your efforts to besmirch the detested Labour government – a distinction that doesn’t even exist anywhere in the world except Malta – are you going to allow yourselves to be used by our European competitors to demolish that system once and for all?

Either way is perfectly fine by me, in case you were wondering. I have no illusions about the matter myself: if Malta survived at all over the last few millennia, it has always been through ‘undercutting competition’ one way or another. And besides: who cares if some European pensioner or other will soon be told that his country can’t afford to dole out benefits any more... because some low-down, dirty, rotten, thieving little Mediterranean island somewhere (Cyprus, of course) has cheated it out of its tax revenue? Those are merely moral and ethical considerations... and we all know they count for jack, when there’s money to be made. 

But if that’s going to be our take on things... then let’s do ourselves a favour, cut out all this ‘holier than thou’ crap once and for all.

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