Issue link: https://maltatoday.uberflip.com/i/1071614
OPINION 10 maltatoday | WEDNESDAY • 16 JANUARY 2019 Better enjoy the economic boom while it lasts... Raphael Vassallo FROM the outset, there were always two major flaws with our entire approach to Europe- an Union membership in 2004 (and before saying another word, I shall have to confess that I was as guilty as anyone else of not spotting them in time. Hindsight is, after all, a rather useful thing to have…) To appreciate the first, you need look no further than the result of the 2003 EU refer- endum itself… which was identical to the result of the general election three months later (52% Yes, 48% No). Most people who voted 'Yes' knew perfectly well they were actu- ally just voting 'Yes' to another Nationalist victory (or against the prospect of Alfred Sant becoming prime minister a second time, depending how you look at things); conversely, the 'No' vote was little more a blanket endorsement of La- bour by its own voters. Ultimately, then, the EU referendum of 2003 – sorry, the 'consultative' referendum, as Sant used to enjoy remind- ing us at a time – was just a glorified dress rehearsal for the subsequent election: so much so, that it was the election, not the referendum, that eventu- ally sealed the decision itself. There were, admittedly, sporadic areas where the discussion veered away from traditionally party lines; many Nationalists were genuinely concerned about abortion, for instance (to the extent that Eddie Fench Adami had to placate them with a negotiated 'protocol'). Meanwhile, some Labour voters were clearly enticed to vote against their party out of a genuine belief in the EU (otherwise, the result of both referendum and election would have been different). But these are the exceptions that make the rule. In the main, the divide was never more than a projection of the same old ancestral feud we are used to in all other areas of life – from politics to band-clubs to football. It is partly for this reason that we never properly discussed the pros and cons of membership in the first place. Even the little discussion that took place – such as when Gunter Verheugen made a spe- cial guest-star appearance on Xarabank – was all rooted in the bread-and-butter concerns that are typical of any gen- eral election. It was all about how much money we were all going to squeeze out of the EU: the famous 'mitt miljun', remember? It was never (or very rarely) about what the EU was, how it worked, and what membership actually implied in the long term. This brings me to a second, less immediately visible flaw. Up to a point, it wasn't even possible to discuss the long- term implications in 2004… because the EU was, and still is, a 'work in progress'. All those treaties we signed along the way? They're all up for revi- sion. All the rules and regula- tions we signed up to (and, more seriously, committed future generations to) 15 years ago? They are all in a process of constant flux. Today's European Union has already evolved into something slightly different from the one we joined. And there are now political forces at work to fur- ther reshape and redefine the EU as we know (and joined) it; an undisguised ideological drive to coalesce the existing free trade zone into something more akin to a 'confederation of nations'. We can even attach a hashtag to this endeavor - #unitedstatesofeurope – and it is gaining momentum as we speak. The year that has just begun is expected to be crunch-time for the proponents of this vision. And before the first month is even over, there may already be yet another tec- tonic change that will erode still further any resemblance between the EU as it was sold to us before membership, and the EU as it is metamorphosing before our eyes. Last week, EU Tax Com- missioner Pierre Mosco- vici casually revealed that the Commission "will present a communication setting out options to move from unanim- ity to qualified majority voting in tax matters." The date of this presentation was specified as 15 January – i.e., yesterday – yet curiously, at the time of writing this article, not a single local newspaper or website has devoted so much as a single word to it… even though the proposed change would effec- tively strip Malta of its veto on taxation, which we were led to believe was 'guaranteed' as part of the original membership package. This makes our reticence on the subject all that much more alarming. For while the Labour and Nationalist par- ties once disagreed on virtu- ally every aspect of Malta's EU bid… this is one issue on which there has always been cross-party consensus. Even before Labour's spectacular post 2004 EU volte-face, there was convergence on the need to protect Malta's sovereignty when it comes to establishing its own tax regime. And once again, the reasons for this ap- parent unanimity had nothing to do with the principle of the matter, or any ideology un- derpinning the concept of 'tax competition'. As with the 'mitt miljun' argument, it is all about money: both sides immediately recognise that, without the freedom to set our own tax rates, all the 'new industries' that have contributed so much to Malta's economic miracle in recent years – the iGaming and financial services, among others – would be wiped out at the stroke of a pen. For make no mistake: it is not just 'the weather', or the fact that 'we speak English', that has enticed so many foreign companies to set up shop here (and create so much employ- ment, etc.) It was the 35% tax rebate, which significantly undercuts most of our com- petition in Europe (which incidentally also explains why the EU is rather pissed off with us at the moment; and why we have so few allies in our war against tax harmonisation…. especially now that Britain will very shortly no longer be an EU member state). Well, it is this very competi- tive advantage – which is in turn 100% reliant on that veto I mentioned earlier – that is di- rectly responsible for all those reports describing Malta's economy as the healthiest and most robust in the eurozone (which probably tell us more about the shocking state of most other eurozone econo- mies right now…. but one step at a time). None of this success would even have been possible, had the EU we joined in 2004 ap- plied a 'qualified majority' sys- tem – instead of 'unanimity' – to areas such as European tax policy. There is, let's face it, not a chance in hell that Malta's position would ever prevail – in taxation, or anything else – in a situation where we always had to convince two thirds (or three quarters, or however the majority will be 'qualified') of the Council of Ministers to back us. And the odds only become bleaker still when you apply them to the European Parlia- ment. We only have six seats out of 750. That means we'd be automatically shy of a 'quali- fied majority' by either 494 votes (at two thirds) or 564.5 votes (at three quarters)… every single time, and on every single issue. I suspect that even Eddie Fenech Adami himself would have changed his mind about joining, had he not been given a clear guarantee – written into the Accession Treaty – that Malta's veto would not be touched. But oh look: barely 15 years later, and all those guarantees and 'protocols' ap- pear to be out of the window. The same veto we were once told was 'sacrosanct' and 'in- violable', is now directly in the European Commission's line of fire. And unless there is a dramatic (and highly unlikely) change to the script, the new Commission sworn in next June will prove only too happy to carry on building on those foundations. For like our own PL and PN, there is not all that much dif- ference between the 'European People's Party' and the 'Euro- pean Socialists' (and even less between the Liberals and the Greens) when it comes to the #unitedstatesofeurope hashtag. All Europe's major mainstream political parties seem to want to see less sovereignty and au- tonomy wielded by individual member states… and more centralisation, more integra- tion... in a nutshell, a European Union that acts more like a single political entity, ruled by a single central government, than a confraternity of equal countries. (Note: I'll leave you to imagine what would become of this country under such circumstances. For what it's worth, my own guess is: not much). Naturally, however – Maltese politics being the bizarre, sur- real thing it has always been – our own PN and PL seem have hit on a common position that somehow embraces both those contradictory visions at the same time. They both claim to want to 'defend Malta's sovereignty' (especially on tax issues)… whilst also agree- ing wholeheartedly with EU's trajectory towards a federalised super-state. Sorry, folks, but it's either one or the other. We're either going to be a sovereign nation that takes sovereign decisions about how to run our own economy… or a tiny, forgotten backwater region of a much larger pan-European super- state; in which case, Malta would cease to exist as a coun- try in its own right, and – like all other former countries to make up the new, unimproved EU – would be remote-con- trolled from Brussels instead. About the very last thing we can possibly expect to keep, under those disastrous circum- stances, is a tax regime that has robbed so many European competitors of their tax-mon- ey, by diverting it all here. So if you happen to be enjoying the effects of the current economic boom (not everyone is, you know)… well, you'd better enjoy them as much as you can while they last. By my reckoning, it is now a matter of weeks – months, at most – before the EU finally clamps down on Malta's thriv- ing financial services sector… and we all go back to precisely where the rest of Europe evi- dently thinks we should really belong in the first place: i.e., languishing towards the bot- tom of the European economic scrapheap, with no hope at all of ever clawing our way back up to the top. Not exactly what we all imagined when we voted 'Yes' in 2004, is it? But hey, look on the bright side. At least we'd go back to being net EU receiv- ers instead of contributors. And who knows? Maybe we'll finally get those 'mitt miljun' after all… Not exactly what we all imagined when we voted 'Yes' in 2004, is it? But hey, look on the bright side. At least we'd go back to being net EU receivers instead of contributors