Issue link: https://maltatoday.uberflip.com/i/1426475
14 NEWS maltatoday | SUNDAY • 7 NOVEMBER 2021 Socialists want 'great shift', but Malta MEPs will oppose tax plans JAMES DEBONO ALL Labour MEPs are disagreeing with a proposal by a think tank entrusted with drafting the roadmap for the European socialists' 2024 election manifesto, which calls for the removal of unanimous voting on European taxation matters. It is one of the proposals included in a report from the top guns of the Socialist and Democrats group in the European Parliament: the "abolition of the unanim- ity principle on matters of taxation in the European Council that makes effective progress towards tax justice virtually im- possible"; and a sensitive incursion into one of Malta's bastions of sovereignty on grand European decisions. The proposal was made in 'The Great Shift', a report by S&D experts and lead- ers to come up with "ground-breaking policy proposals to solve today's most pressing issues" and which will feed into their 2024 election programme. Unveiled last month by S&D Group leader Iratxe García Perez and vice-pres- ident Eric Andrieu, together with former Danish Prime Minister Poul Nyrup Ras- mussen, the report is dubbed a 'light- house' for European social democracy and a roadmap for the way progressives views the future. Various proposals include a binding European anti-poverty law that will erad- icate poverty by 2050, an EU net-wealth tax to combat growing inequalities and finance public investment, a guarantee of energy as a basic social right, and factor- ing in the carbon footprint of imported goods. But it is a proposal to remove the need of unanimity from the European Council which is bound to expose the rift between Malta's Labour and mainstream social- ists. All four Labour MEPS who spoke to MaltaToday welcomed various aspects of the report, but spoke against the re- moval of the unanimity principle, which requires consensus among all member states on taxation. "Taxation is a member state competence and unanimity on tax- ation as provided in the Treaties should stay in place… Each state's right to decide on their own taxation systems according to their particular needs should be safe- guarded," Cyrus Engerer, a critic of this kind of 'one-size-fits-all model, said, and warned of the disproportionate burdens such measures place on smaller open economies at Europe's periphery. Josianne Cutajar also defended Malta's "fiscal sovereignty". "We don't have the land size, natural re- sources, or industrial resources that other countries do, and fiscal policy is crucial for our competitiveness." Alex Agius Saliba argues that Malta, with its location at Europe's periphery, needs "sufficient latitude" on tax to coun- ter its insular disadvantages. He illus- trates this by noting the EU's very strict rules on state aid, to show Malta's need to extend its arms. What is crucial to Agius Saliba, is that the island fights harmful tax practices in line with international norms, saying he is open to stronger rules. The former Labour prime minister Al- fred Sant, now head of the MEPs' delega- tion, also expresses "complete disagree- ment" with the abolition of unanimity. "It's against Malta's national interest," Sant says, while calling for discussions on how to achieve tax justice through work- able solutions. The S&D report is also proposing a 20% 'fair global minimum corporate tax' that would also be used to distribute tax income revenue towards developing countries. Sant says the move reflects an emerging consensus, with even Malta accepting the OECD's mainstream direc- tion on a global corporate rate. But it's the details that count on these kinds of agree- ments. "The Maltese government will have to play it by the ear, taking into full account the local realities which will definitely be of a different scope and dimension to what other countries will be linking their positions," he said. Taxing wealth to fund investments Another highlight of the report is the proposal of an EU 'net wealth tax' that ensures the wealthiest households in the EU contribute to the financing of policies that foster sustainability and wellbeing. Agius Saliba says the guiding principle of the report is that low-income house- holds must not shoulder the green and digital transition costs or the COVID crisis through job losses, higher prices, or taxes. "The idea behind a wealth tax is to ensure the wealthiest households contribute to the financing of policies that foster sustainability and well-being, bringing a balance in a socially unjust world and reducing existing inequalities and imbalances between the richest and the poor people in the society." This must be seen in a context where 21% of the EU population, over 90 million citizens, are considered at risk of poverty and exclusion, and 15% of the EU work- force lives on wages that are below the national poverty line, despite working full-time. "At the same time, 1% of households in Europe hold approximately 25% of the continent's net wealth, without paying any tax on such assets in all but a single EU country," Agius Saliba adds. Engerer says the "biggest fight" in the European Union – and at a national lev- el – should be against tax evasion and money laundering. "In that regard we should direct our efforts to have strong- er legislation and stronger enforcement," he says, but adds that he also believes in a progressive economic policy that invests in people "rather than taxing them with austere measures". He also wants taxes shifted away from the vulnerable, to those who can carry the burden, especially those who operate with disregard to the planet's ecological future. "We urgently need a green transi- tion that is just, and that doesn't leave the Labour MEPs are undaunted by their European socialist counterparts' big roadmap towards wealth taxation and harmonisation. James Debono on Malta's differing views on how to finance "the great shift"