Small EU countries need tax competition tools to compensate for major competitive disadvantages

Maltese MEP and former Prime Minister Alfred Sant said that small EU countries and islands use tax competition tools in order to compensate for major competitive disadvantages due to their limited endowments and distance from major markets. Along with Malta, even Ireland and Cyprus have notably expressed their great concerns regarding the tax harmonisation proposal and underlined the harmful consequences for their tax revenues and for employment on their territories.
Dr Sant intervened at ECON during an exchange of views with national Parliaments on the Common Consolidated Corporate Tax Base (CCCTB).
“To combat tax abuse, the scope for using the tools available at a national level is far from being exhausted. To turn as of now to new European tools is counterproductive and not in the interest of member states, or at least some of them, especially when the real intention is to introduce tax harmonisation. The objective at a European level should be that of enforcing transparency across the board, both at EU level and that of the OECD.”
Dr Sant said it is a great pity that the effort that must be carried out to curtail tax evasion and aggressive tax planning has been deviated from what should be its proper goal: that of combatting tax abuses primarily on a national basis. Instead, the real target has become that of curtailing tax competition with a view to moving towards tax harmonisation on a European basis.
“In my view, we’re putting the cart before the horse. Tax competition is a legitimate tool of policy. It is certainly needed by small countries, islands and other economic systems which are placed at major competitive disadvantages due to their limited endowments and distance from major markets.”
Dr Sant said that working towards tax harmonisation, first by establishing a common corporate tax base and then by driving forward towards a minimum effective tax rate across Europe, is unjustifiable on political and economic grounds.
“Even the US – a fully fledged federal state – has nothing like this. Indeed as of now already, with the constraints of the fiscal compact and other conditions that reflect EMU in Europe, member states are subject to more constraints in their budgetary management than are the states of the US. In deploying the state powers that the exercise of their sovereignty allows, member states of the EU can do much more to curb tax abuse.”
The key principle for all should be transparency, remarked Dr Sant.

Maltese Version – STATI ŻGĦAR JEĦTIEĠU KOMPETIZZJONI FIT-TAXXA BIEX JIKKOMPENSAW GĦALL-IŻVANTAĠĠI TAGĦHOM

Il-Kap tad-delegazzjoni Maltija Laburista fil-Parlament Ewropew Dr Alfred Sant qal li pajjiżi u gżejjer żgħar fl-UE għandhom jitħallew jużaw għodda biex ikunu kompetittivi fit-taxxa u jagħmlu tajjeb għall-iżvantaġġi li jsofru minħabba riżorsi limitati u distanzi twal mis-swieq ewlenin. Dr Sant kien qed jiddibatti fil-Kumitat ECON waqt skambju ta’ ideat mal-Parlamenti nazzjonali fuq Bażi ta’ Taxxa Korporattiva Konsolidata Komuni. Flimkien ma’ Malta, l-Irlanda u Ċipru wkoll esprimew it-tħassib tagħhom dwar il-proposta tal-armonizzazzjoni fit-taxxi u tkellmu fuq il-konsegwenzi fid-dħul mit-taxxi u fil-qgħad fuq it-territorji tagħhom.
Dr Sant qal li l-użu tal-għodda kontra l-abbuż li għandna f’idejna fuq livelli nazzjonali għadha m’hix eżawrita.
“Allura jkun kontro-produttiv jekk induru minn issa fuq għodod Ewropej ġodda. Dan ma jkunx fl-interess tal-istati membri, jew għall-inqas ma jkunx fl-interess ta’ wħud minnhom, speċjalment meta l-intenzjoni reali tkun l-introduzzjoni tal-armonizzazzjoni fit-taxxa. L-għan f’livell Ewropew għandu jkun l-infurzar tat-trasparenza fil-pajjiżi kollha, kemm f’livell Ewropew u kemm f’dak tal-OECD.”
Dr Sant qal li hi ħasra li l-isforz li qed isir biex tonqos l-evażjoni tat-taxxa qed ikun devjat mill-għan proprju tiegħu: il-ġlieda kontra l-abbużi fit-taxxa primarjament fuq bażi nazzjonali. Minflok, l-għan reali sar dak li nnaqqsu l-kompetizzjoni fit-taxxa bl-iskop li nimxu lejn armonizzazzjoni fit-tassazzjoni fuq bażi ewropea.
“Fil-fehma tiegħi, qed inpoġġu l-karru qabel iż-żiemel. Il-kompetizzjoni fit-taxxa hija għodda leġittima fil-politika tat-tassazzjoni. Żgur li hija meħtieġa mill-pajjiżi ż-żgħar, gżejjer u minn sistemi ekonomiċi oħra li jinsabu bi żvantaġġi kompetittivi kbar minħabba n-nuqqas ta’ riżorsi u d-distanzi mis-swieq ewlenin.
Ħidma favur l-armonizzazzjoni fit-taxxa, l-ewwel permezz ta’ taxxa korporattiva komuni u mbagħad b’ħidma lejn rata ta’ taxxa minima effettiva fl-UE kollha, hija inġustifikabbli kemm fuq bażi politika u kemm fuq bażi ekonomika.
“Anki l-Istati Uniti – stat federali komplut – ma għandu xejn li jixbaħ din il-ħaġa. Huwa minnu li fil-preżent, minħabba l-issikkar tar-regoli fiskali u kundizzjonijiet oħra li jirriflettu l-għaqda ekonomika u monetarja fl-ewropa, l-istati membri qed ikunu suġġetti għal aktar issikkar fit-tmexxija tal-baġits tagħhom, ħafna aktar minn kull stat tal-Istati Uniti. L-istati membri jistgħu jagħmlu ħafna aktar biex inaqqsu l-abbuż fit-taxxa fil-qafas tas-sovranita` tagħhom.”
Il-prinċipju ewlieni għandu jkun it-trasparenza, qal Dr Sant.