De Marco: Malta must do utmost to fend off EU challenge on tax competitiveness

Shadow finance minister warns against dependence on one-off revenues in the face of rising government spending

matthew_vella
Matthew Vella
2 November 2016, 5:14pm
Mario de Marco
Mario de Marco
The Nationalist deputy leader Mario de Marco paid tribute to former Nationalist administrations that were crucial in building the economic foundations of the buoyant growth that Malta was currently experiencing under Labour.

The shadow finance minister, who served in the last Gonzi administration, delivered a lengthy introduction to his speech on the finance ministry’s budgetary vote, in which he asked finance minister Edward Scicluna not to resort to partisan plaudits for an economy that was inherited from the Nationalist government.

“I would have expected the Prime Minister to say thanks, or at least recognise those predecessors who created these economic sectors in the first place, and who clamoured for EU funds to build these economic opportunities. Instead we have seen a rewriting of history,” de Marco said.

De Marco questioned whether an increase in recurrent spending was sustainable, even in the face of increased revenue.

“I am not convinced of government’s bullishness on this matter: spending that takes place today is guaranteed will take place for years afterwards, but there is no such guarantee for revenue if we are impacted by an international crisis on sectors like tourism or financial services.”

He urged caution against the prospect of international competitors mounting a challenge to take over business from Malta's gaming industry, which generates millions in licence fees and tax.

He said increased government spending was also increasing the national debt, although debt was decreasing as a percentage of GDP. “Previous administrations also saw higher debt, but we have much to show for it,” de Marco said of the PN government’s record of capital projects.

De Marco said one-off revenues, such as the citizenship sale, were already limited by the finite number of passports that would be legally on sale.

He complained of the way the government arbitrarily raised excise on consumer goods as a substitute for eco-reduction fees, asking that they heed the GRTU’s complaints on this matter.

Panama Papers and corporate taxation

De Marco also said that the effects of Panama Papers were felt on Malta, tying the European Commission’s attempts to come down hard on cross-border tax avoidance and corporate tax laws, with Joseph Muscat’s refusal to sack Konrad Mizzi, who was revealed of having opened an offshore company in Panama.

“The success of Malta’s financial services depend on Muscat, and I ask him to take the necessary steps. I hope Malta will keep on resisting EC efforts to change our taxation system, which gives us the edge on our competitors. If this sector is hit, it will be the country and our finances that will suffer. The Opposition offers its support on this matter, as MP Charles Mangion did in previous times with the PN government. We must do our utmost to defend employment in financial services.”

matthew_vella
Matthew Vella is executive editor at MaltaToday.