Dalli and Metsola at war over MEP vote on taxation report that punished Malta

The Nationalist Party’s MEPs voted against Malta’s interests in an amendment that could have assuaged a resolution that took Malta, among other member states, to task over financial crimes, tax evasion and tax avoidance, Labour MEP Miriam Dalli said.

Addressing a press conference at the party’s headquarters, Dalli and Parliamentary Secretary for Financial Services Silvio Schembri said the PN’s vote had “endangered the livelihood of thousands of people in Malta”.

The PN MEPs however have hit back and pointed out that like the Labour Party’s MEPs, they too voted against the final resolution being referred to by Labour.

The European Parliament resolution of 26 March 2019 on financial crimes, tax evasion and tax avoidance highlighted, specifically, the high level of foreign directive investment flowing to Belgium, Cyprus, Hungary, Ireland, Luxembourg, Malta, and the Netherlands – countries which adopt a generous tax system for non-domiciled industries – and called on the European Commission to assess the role of the companies used as taxable entities in these countries.

A direct economic challenge from the EP’s non-binding resolution was a call for the Commission to forge ahead with plans for a common corporate tax base, which supporters of Malta’s taxation regime oppose.

Malta’s inland tax revenue receives upwards of €200 million in income tax from foreign-owned companies remitting their profits to tax-resident companies in Malta.

Specifically, Dalli said that the Nationalist MEPs had not voted in favour of a particular amendment, tabled by MEPs from the left-wing GUE group (European United Left), to recognise the national interest of smaller states in safeguarding their sovereignty on taxation.

The amendment sought an insertion in the resolution of the following text: “Takes the view that the principle of unanimity is a last resort for the defence of national interests against the supranational imposition of guidelines and decisions that run counter to those interests; takes the view, therefore, that moving from unanimous approval to approval by qualified majority is to go from a situation in which each country’s vote is worth the same to one in which the vote of bigger countries is worth more than the vote of smaller countries; points out that the unanimity principle puts the member states on an equal footing in the decision-making process, and it is certain that ending this principle will only make the main powers more powerful, reinforcing the existing imbalance between the member states with regard to decision-making power.”

Labour MEPs voted in favour of the amendment, but the Nationalist MEPs voted against the amendment, which was not accepted by the plenary of MEPs. All Maltese MEPs finally voted against the final resolution.

Dalli accused David Casa, Roberta Metsola and Francis Zammit Dimech, of “voting in favour of a resolution” that “threatens the employment and livelihood of thousands… they voted for the Maltese economy to collapse.”

 “While the PN MEPs spoke one way in Malta but their actions in Europe told a very different story. The resolution touched upon the subject of unanimity, without which Malta would not longer be able to decide for itself on matters of taxation, thus undermining its competitiveness,” she said.

“Unlike the PN’s MEPs, Labour voted in favour of the amendment. They voted against a small country like ours having as strong a voice as other countries,” she said.

Reacting to the press conference, Metsola, Casa and Zammit Dimech accused Dalli confusing their facts.

“The only MEPs that are in favour of there being a single tax system in all EU countries are the socialist MEPs,” they said. “This was confirmed in both the European Socialists electoral programme as well as the socialists’ candidate for European Commission President Frans Timmermans.”

The MEPs said that the report being referred to by the Labour Party was one which the PN’s MEPs had voted against, and not in favour of. “Some basic research on the website of the European Parliament confirms this. This means that what the Labour Party’s MEP is saying is a blatant lie. The Labour Party’s MEPs have been caught supporting an electoral manifesto that will remove Malta’s right to decide for itself on tax.”

Parliamentary secretary Silvio Schembri accused the PN of having gone against the political consensus that had previously existed on the country’s financial services.

“This affects the thousands of people who were directly employed by the gaming, maritime and financial services industries, as well as those who were employed in sectors that were indirectly affected. An ingredient in the country’s attraction to foreign investors is its tax system.”

The EP resolution also expressed concerned that Malta and Cyprus had citizenship schemes those that potentially pose a high risk to the integrity of the common reporting standard on tax and called for a phase-out of the Individual Investor Programme and sale of passports.

It also made reference to the alleged involvement of Maltese PEPs in a possible episode of money laundering and tax evasion connected to a United Arab Emirates (UAE)-based company called ‘17 Black’, the murder of investigative journalist Daphne Caruana Galizia, and the leak from the servers of ElectroGas, the company operating Malta’s power station, which pointed her to a possible transfer of large amounts of money to Maltese PEPs responsible for the power station.