Issue link: https://maltatoday.uberflip.com/i/1253597
maltatoday | SUNDAY • 31 MAY 2020 OPINION done 20 years ago… I would also argue that we need to ask ourselves another, very different question to- day. What are the real economic fac- tors behind this remarkable rever- sal of economic fortunes… and how may they be impacted by a sudden impulse-decision to borrow €650 million we might not actually need? The answer to that first question must surely include the fact that, throughout its history – and under all administrations, both National- ist and Labour – Malta has always resisted the temptation to borrow from international institutions such as the World Bank, the IMF, or the ECB. Instead, our policy has always been to raise money through lo- cal government bonds. And while this habit of ours has occasionally wrought havoc with our GDP-to- debt ratio… it remained a case of borrowing money from ourselves: which also means that paying off that debt actually translated into Malta pumping money back into its own economy. It was this factor, far more than any amount of billions in EU fund- ing, that spared Malta the fate of other Eurozone economies that now need to be bailed out (yet again). And yet, here we all are: actively contemplating whether to borrow… … 650 million euros!... … in order to overcome an eco- nomic crisis, which most credit rat- ings agencies predict we can easily overcome on our own merits, with- out entering any debt at all. And that's before factoring in any of the conditions attached to the debt. In Parliament this week, Fi- nance Minister Edward Scicluna appeared to suggest that the €650 million loan is somehow contin- gent on altering our taxation re- gime: something which the EU has been pressuring us to do for years anyway; and which both the Na- tionalist and Labour Parties (in- cluding all six of our MEPs) have so far fiercely resisted. "The worst danger for Malta, and this is where we must see what is in the national interest, is that they are turning to company tax- es, where Malta was already facing challenges and threats [before the outbreak of the pandemic]," Sciclu- na warned. He also specifically referred "to the Common Consolidated Corpo- rate Tax Base commonly referred to as tax harmonisation, whereby Malta would no longer be allowed to impose tax according to its na- tional regime…" Ironically, Malta's historic resist- ance to this level of EU interfer- ence is another of the reasons for our economic turnaround in recent years. For while the pandemic has indeed decimated entire sectors of the local economy – mostly tour- ism, and its many dependencies – Malta's financial services sector (which, as we all know, relies on Malta's continued tax sovereignty for its survival) does not seem to have been affected much at all. This in turns accounts for why Malta's allocated share of the €750 billion recovery fund is so small, compared to that of other Europe- an countries. Our economy has proven to be resilient enough not to need the 'hundreds of billions' that are being offered to other, less fortunate EU member states: largely because we always avoided taking on unneces- sary foreign debt; and because we have always (rightly) insisted on maintaining sovereignty over tax- ation. And yet, the EU now seems to ex- pect us to dismantle the very causes of our own economic success, just for the benefit of being saddled with a mountain of debt – of the kind we have always avoided, in the past - that will have to be paid by our children, their children, and their children's children, over the next half-century or so. But hey, what's there to worry about? Who cares if Malta throws away the only assets that have per- mitted us to remain competitive – even at the worst of times – and goes from being the 'best-perform- ing Eurozone economy', to a debt- slave of the EU? It's still… (drums rolling)… ONE… BILLION… EUROS! And who could possibly say no to that?