Comodini Cachia says EPP will 'silently pressure' S&D over Mizzi’s Panama connection

Labour MEP Alfred Sant warns PanamaPapers leak will reinvigorate EU countries' efforts towards a common consolidated tax base 

Nationalist MEP Therese Comodini Cachia
Nationalist MEP Therese Comodini Cachia

The European People’s Party will apply “internal pressure” on the Socialists and Democrats group to urge the Labour government to take action against energy and health minister Konrad Mizzi, Nationalist MEP Therese Comodini Cachia revealed.

“The EPP is following the Panama Papers scandal very closely, but there is a limited amount of pressure it can apply on a non-EPP party,” Comodini Cachia told journalists during a question and answer session at the European Parliament on Thursday. “The EPP will call the S&D in to see what action they’re taking against Konrad Mizzi, a minister of theirs who is embroiled in the scandal. However, we will use internal procedures and apply internal pressure, and it won’t end up as a fight on the media.”

Pressure on Mizzi and OPM chief of staff Keith Schembri to resign from their political posts has mounted since their offshore companies were listed in the ‘PanamaPapers’ – described as the largest leak of secret documents in history.

The S&D – the European political family of the Labour Party – has called for  political leaders involved in the scandal to appear in front of the EP’s tax committee.

“The fact that Panama’s status as a tax haven is not only being used by the criminal underworld, but by some political leaders, confirms how widespread these immoral tax practices can go,” S&D chairperson Gianni Pitella said. “It discredits the political system in the eyes of the citizens.”

Comodini Cachia told journalists that the PanamaPapers scandal is “proof that some politicians and businesspeople feel that they can do whatever they please”.

“It shows how accessible such financial structures are to people who want to avoid tax and abuse their positions of power. The EU must analyze these structures and if necessary clamp down on them.”

Labour MEP and former prime minister Alfred Sant warned that the PanamaPapers could have harmful repercussions on Malta’s financial services industry.

“There already is a significant movement in Europe in favour of tax harmonization – which would be poisonous for Malta - and the Panamaleaks will lead to a new wave of pressure towards it,” he said. “Malta remains against tax harmonization but it is in a total minority, and has been harshly criticised in the council of ministers for its stance against a common consolidated tax base. The Panamaleaks will further complicate Malta’s position and we must be very careful.”

The common consolidated corporate tax base proposal would require EU member states to develop a common set of rules to determine the tax base of companies with operations in multiple European companies.

If passed, it is expected to deliver a hammer blow to Malta’s financial services industry, that attracts foreign companies to set up shop on the island by offering a refund of up to 85% on taxed dividends. This effectively reduces shareholders’ tax burdens to close to 5%.

However, Sant vehemently denied that Maltese law is tantamount to encouraging companies to avoid tax.

“Ever since Malta joined the EU and entered the Eurozone, our options to remain competitive have been limited. We cannot introduce tariffs, we cannot devalue our currency, and there are stringent restrictions on state aid. This means that we have to offer advantageous tax rates so as to remain competitive. The only other option would be internal devaluation, which would involve reducing wages.”

Sant refused to comment on Mizzi’s involvement in PanamaPapers, but argued that the leaks themselves were funded by the CIA and US hedge fund billionaire George Soros.   

He was referring to international whistleblowing organisation WikiLeaks, that tweeted on Wednesday that the data leak was “produced” to target Russia and its president Vladimir Putin.

Wikileaks spokesperson and Icelandic journalist Kristinn Hrafnsson has called for the data to be published in full, warning that withholding the documents could not be “responsible journalism”.

He also told Russia Today that he’s not surprised that no big American names were amongst those in the leaked 11.5 million documents of the Panamanian law firm Mossack Fonseca.

“It seems to be skewed at least a way from American interest. There’s always a possibility that it’s not a journalistic bias but simply a bias in the documents themselves.” 

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