How party trombones all claim to have ‘saved Malta’ from EU’s tax blacklist

A perfectly balanced result that just swayed Malta’s way on the strength of 24 abstentions, saw the island escape the tax haven label in the European Parliament this week.

Malta’s six MEPs all voted against the amendment proposed by the Socialists and Democrats to include Malta, Ireland, the Netherlands and Luxembourg on an EU blacklist of tax havens.

But avoiding this nightmare scenario was not enough as Nationalist Party MEPs and their Labour Party counterparts engaged in a tit-for-tat over the matter.

Nothing could have depicted the senseless bickering than Thursday’s front pages of In-Nazzjon, the PN organ, and l-Orizzont, the Labour-leaning General Workers’ Union daily.

‘PN MEPs’ effort was crucial’, In-Nazzjon said beneath the headline that screamed, ‘The socialists’ attempt to label Malta a tax haven has failed’.

Meanwhile, l-Orizzont said ‘the votes of the PL MEPs were crucial to prevent Malta being considered a tax haven’.

The contrasting headlines were just a continuation of the tit-for-tat that started on Twitter and Facebook on Wednesday ahead of the vote.

Former AD chairperson Arnold Cassola commenting on the political blame game on Facebook

The PN MEPs, primarily the head of delegation David Casa, was all agog about the incessant work they were doing to convince MEPs from other political groupings to vote against the amendment.

Casa also took pot shots at the Labour MEPs, saying they were not able to convince their own political grouping not to table the damning amendment.

David Casa and Marlene Mizzi bickering on Facebook

The response from the other side was incredulity. Labour MEP Marlene Mizzi accused Casa of hypocrisy, saying the situation had come to this as a result of the demonization of Malta by PN MEPs over the past years.

If this is all confusing, here is the situation explained in 20 points:

1. The amendment to include Malta and other countries on the tax haven blacklist was proposed by the Socialists and Democrats
2. The vote in the European Parliament was a perfect tie: 327 voted in favour, 327 against and 24 abstained
3. This is how the S&D MEPs voted: 146 in favour, 17 against, 4 abstained
4. This is how the EPP MEPs voted: 22 in favour, 168 against, 5 abstained
5. The three PL MEPs broke ranks with their grouping and voted against
6. The three PN MEPs toed the line of their grouping and voted against
7. Malta’s tax system was approved by the European Commission when the country joined the bloc in 2004
8. However, this has not stopped the larger EU member states from targeting Malta and calling for a harmonised EU-wide corporate tax base
9. Malta has always resisted calls for tax harmonisation along with other member states like Ireland, Luxembourg, the Netherlands and Britain
10. Criticism of Malta’s tax system by MEPs and other member states has long pre-dated the Panama Papers affair
11. However, calls for EU-wide action on closing tax loopholes have intensified since Panama Papers and the more recent Paradise Papers that lifted the lid on tax avoidance and money laundering by the world’s rich
12. The two major political parties in Malta agree that the tax system should be defended and are opposed to EU tax harmonisation
13. According to a study published by the Malta Financial Services Authority last October, the sector contributes 11.2% in gross value added and accounts for 10.2% of employment, making it one of the largest contributors to the economy
14. The PL and PN believe that competitive taxation is one of the attractions a jurisdiction like Malta that sits on the EU’s periphery can offer investors
15. However, this has not stopped them from getting at each other’s necks over the past four years as the PN intensified its campaign on good governance
16. Labour MEPs blame their PN counterparts for fomenting a hostile environment against Malta in the European Parliament through their frequent criticism of Muscat’s government in the European forum
17. PN MEPs blame the situation on Joseph Muscat’s lack of action against Konrad Mizzi and Keith Schembri for their involvement in Panama Papers
18. Financial services practitioners fear the political bickering has fractured the consensus on financial services adopted by the two major parties since 1994 when the country replaced the contentious offshore setup with an onshore system
19. Others like Alternattiva Demokratika argue that Malta’s low tax regime for corporates is unfair on ordinary workers and small companies and should be amended to ensure the larger companies pay their fair share of taxes
20. With Malta only just avoiding the black list, pressure will continue to increase for the adoption of a harmonised tax system across the EU, especially after the UK exits the bloc