Tax Harmonisation Inhibits Competitiveness of Disadvantaged Regions

Former Prime Minister Alfred Sant told the European Parliament that calls for the harmonisation of tax structures, or even for “fairness” in so called tax competition, could inhibit even further the competitiveness of areas which find themselves at a disadvantage compared to better endowed areas within the monetary zone. Dr. Sant said that in the absence of a well-organized transfer union, tax competition will remain a tool by which peripheral or disadvantaged regions can survive. ‘The challenge is to make such competition transparent’, emphasised the Maltese MEP.

Dr. Sant explained his reservations at the EP when he abstained on ‘The Annual Tax Report’. He said that in a single market, especially one with a single currency, it is to be expected that there will be demands for a level playing field across all business related matters, including taxation. This would ensure that competition occurs under fair and transparent conditions.
Dr. Sant remarked that operational conditions for enterprises across the monetary area are not the same because in the real world, things shape up differently. Physical endowments are an obvious example of this. When the monetary zone operates as a federal system, or a so-called transfer union, mechanisms exist to ensure that those who are less well endowed with competitive attributes, received compensation for their handicaps. This is done by financial or other transfers, automatic or politically directed. None of this is possible in the euro zone, emphasised Dr. Sant.
The report passed with 444 votes in favour, 110 against and 41 abstentions.

Maltese Version

‘FIŻ-ŻONA EWRO MA TISTAX TNEĦĦI L-KOMPETIZZJONI FUQ IT-TAXXI’

Alfred Sant qal lill-Parlament Ewropew li fiż-żona Ewro ma tistax tneħħi l-kompetizzjoni bejn il-pajjiżi fuq it-taxxi, għax pajjiżi ċkejkna li m’għandhomx riżorsi tagħhom bilfors joffru rati ta’ taxxi kompetittivi biex jattiraw l-investiment u x-xogħol. Dr. Sant qal li jekk l-istrutturi fiż-żona Ewro ikunu l-istess għall-pajjiżi kollha, dawn ikunu ta’ żvantaġġ għall-kompetittivita’ ta’ pajjiżi diġa’ żvantaġġjati fiż-żona Ewro. Il-kompetizzjoni fit-taxxa tibqa’ l-għodda li biha reġjuni periferali jew żvantaġġjati jistgħu jibqgħu kompetittivi. ‘L-isfida hija kif nagħmlu dil-kompetizzjoni trasparenti’, enfasizza Alfred Sant.

Dr. Sant esprima r-riservi tiegħu meta astjena għar-riżoluzzjoni dwar l-‘Annual Tax Report’ fil-Parlament Ewropew. Huwa qal li f’suq wieħed, b’munita waħda, wieħed jistenna trattament ugwali fin-negozju, inkluż fit-tassazzjoni. Dan jiżgura kompetizzjoni taħt kundizzjonijiet ġusti u trasparenti. Dr. Sant qal li l-kundizzjonijiet għal intrapriżi fiż-żona Ewro mhumiex jaħdmu l-istess għal kulħadd. Meta żona monetarja topera bħala sistema federali, jeżistu mekkaniżmi li jikkumpensaw għal żvantaġġi ta’ reġjuni partikolari. Dan isir awtomatikament, b’mezzi finanzjarji jew b’deċiżjonijiet politiċi. Xejn minn dan mhu possibbli fiż-żona Ewro, enfasizza Dr. Sant.

Ir-rapport għadda b’444 vot favur, 110 kontra u 41 astensjoni.