Malta against EU taxes to placate funding gap created by Brexit

With Malta expected to receive fewer EU funds as a result of economic growth, Parliamentary Secretary Aaron Farrugia says government will negotiate best possible package while opposing any moves by Brussels to introduce taxes • Nationalist MP Kristy Debono warns rule of law concerns could impact EU funding

Malta is ready to negotiate with the Commission on EU funds, Aaron Farrugia said on Xtra today, as Kristy Debono highlighted the impact rule of law issues could have on how much money the country received
Malta is ready to negotiate with the Commission on EU funds, Aaron Farrugia said on Xtra today, as Kristy Debono highlighted the impact rule of law issues could have on how much money the country received

Malta will oppose any moves by Brussels to introduce new taxes to fill the vacuum in the EU budget that will be created by Brexit, Parliamentary Secretary Aaron Farrugia said.

He was speaking on Xtra, a discussion programme on TVM, which dealt with EU funding that will come Malta's way in the next budget round between 2020 and 2027.

With Malta's GDP per capita reaching 90% of the EU average, the country is now set to lose out on a large portion of funds.

Farrugia said Malta had formulated its negotiating position and it was still too early to determine what level of funding the island will get.

"Our position as we go into negotiations is clear – we will not assist the EU in introducing any new taxes due to things such as the vacuum in the EU’s budget which Brexit will create," Farrugia said.

Asked by programme presenter Saviour Balzan whether Malta would be able to obtain as many funds as before, or whether this was virtually impossible, Farrugia said he could not give a monetary figure at this stage.

"I don't know what all the variables will be. Brexit, for instance, is an ongoing matter which will affect the allocation of funds. Moreover, the  Commission wants to reduce funds for cohesion and for agriculture," he explained.

However, Nationalist Party general council president Kristy Debono said EU funds that were "vital for the economy" could be lost because of the rule of law situation.

Debono said it was not just the GDP criteria that would impact funding. "Commissioner [Vera] Jourova has said that countries in which the rule of law is not strong might have problems in obtaining EU funds," she said.

Farrugia rebutted the argument, insisting Malta had no issue with the rule of law. “Poland is the only country with which the Commission has a problem with at the moment. We have no issues with the Commission.”

He said that after the European Parliament’s PANA committee visited Malta on their fact finding mission related to the Panama Papers and the rule of law, the Organisation for Economic Co-operation and Development portrayed Malta as having a completely compliant fiscal taxation regime.

Passport scheme

Asked whether the PN was against an extension of the passports sale scheme to make up for any reduction in EU funding, Debono said that she thought more transparency and due diligence was needed in the citizenship programme.

She also maintained that Henley & Partners should not remain the only agents selling citizenship, but that the programme should start to include Maltese agents, so they could also benefit from the scheme.

"However the PN parliamentary group still needs to discuss the Individual Investor Programme in detail," she added.

Farrugia said Malta would also be turning to niche markets, which it was not previously involved in, to find new sources of income – such as medical tourism and tertiary education.

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