Malta against removal of tax exemption on aviation and shipping fuels

Finance Minister Edward Scicluna said that while changes are required to the Energy Taxation Directive removing the tax exemption would have negative repercussions on Malta

Finance Minister Edward Scicluna is attending the ECOFIN meeting in Helsinki, Finland
Finance Minister Edward Scicluna is attending the ECOFIN meeting in Helsinki, Finland

Malta is against the removal of tax exemptions on aviation and shipping fuels from the Energy Tax Directive, arguing that such a move would lead to negative repercussions.

Finance Minister Edward Scicluna is currently attending the Informal ECOFIN meeting in Helsinki, Finland, where he insisted that a removal of the exemption was not the way forward.

“While Malta is aware that the Energy Taxation Directive needs to be updated to reflect present day realities, and to help promote the use of renewable and clean energy sources, the removal of tax exemptions on aviation and shipping fuels will have serious repercussion on many member states, including Malta, unless tackled internationally,” Scicluna said in a statement.    

In the absence of an international agreement that would see the exemption removed outside the EU as well as within it, Malta, and other European countries would see reduced revenues from bunkering and refuelling activities as operators would choose to do this outside the EU where exemptions would still be in place.

The finance ministers also debated the resilience of financial market infrastructure and the role of the financial sector in countering hybrid threats, the next steps needed by the EU to enhance the Capital Markets Union (CMU), as well as the European Fiscal Rules.

On the subject of fiscal rules, Scicluna said that there were elements of a fiscal framework which needed to be reviewed, including the “overreliance on unobservable indicators such as the output gap, and the complexity of the rules”.  

“However, changing the rules will not be enough,” Scicluna said. What is truly imperative is ensuring that the rules are observed and properly enforced. If we do not address this core issue, the framework will remain weak.”

The informal ECOFIN was preceded by a Eurogroup meeting where ministers held an exchange of views on the quality of public finances, focusing in particular on public investment.

Ministers shared best practices in conducting spending reviews and their experiences on measures to boost the efficiency of public investment.

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