Edward Scicluna warns of EU rescue package: ‘Beware the fruit that can be a prickly pear’

Edward Scicluna has warned of the potential pitfalls of a proposed EU rescue package, insisting that financing options being floated could harm Malta.

The Finance Minister sounded the warning in parliament on Wednesday afternoon when asked about the rescue package being discussed at EU level as part of the COVID-19 recovery.

“This is not just about the percentage of EU funds that will be distributed as grants or on loan but we must beware the fruit that can turn out to be a prickly pear,” Scicluna said.

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He urged MPs to look beyond the size of the funding package.

“We have to know who will eventually pay for the debt and this is where we have to uphold the national interest because there are dangers for Malta in some of the proposals made to fund the package,” he added.

Scicluna said one of the proposals was the introduction of a climate tax on airline and ship travel, something that will bite countries like Malta.

“Such a tax will hit southern European member states bad… this is why I urge MPs not to simply look at the size of the package but what it could entail,” he cautioned.

The European Commission proposal for €750 billion recovery package includes the possibility of creating new revenue streams for the EU budget, including a digital tax, a carbon border tax and the possibility of a “large enterprises” tax.

These revenue streams will provide the Brussels executive with their own resources. In its technical documents, the Commission said these resources could theoretically cover the repayment and interest costs of the entire amount of money borrowed for the recovery plan.

However, it will be up to national governments to decide on the matter.