EU leaders tentatively agree on new taxes, but Malta ready to use veto

The conference is expected to start at 7.00pm

Tista' taqra bil- Malti.

EU leaders have tentatively agreed on the gradual introduction of new EU-wide taxes to boost the bloc’s revenues as they managed a hard-fought compromise on its long-term budget. But when push comes to shove, the Maltese government stands ready to veto such efforts.

At a press conference held in the wake of an a gruelling Special European Council which lasted for five days – instead of the scheduled two – Prime Minister Robert Abela insisted that Malta would not be subject to new European taxes in return for the EU funds it will receive under the Multiannual Financial Framework for 2021-27 and the Next Generation EU recovery package introduced to address the economic impact of the Covid-19 pandemic.

The conclusions agreed upon during the Council suggest differently, with member states agreeing off the bat that a new own resource – as the EU describes its sources of funding – based on non-recycled plastic waste set to apply as from next year.

But early next year, the Commission is also set to put forward “proposals on a carbon border adjustment mechanism and on a digital levy, with a view to their introduction at the latest by 1 January 2023.”

“In the same spirit, the Commission will put forward a proposal on a revised ETS scheme, possibly extending it to aviation and maritime. Finally, the Union will, in the course of the next MFF, work towards the introduction of other own resources, which may include a Financial Transaction Tax. The proceeds of the new own resources introduced after 2021 will be used for early repayment of NGEU borrowing,” the Council conclusions read.

In reply to a question by Newsbook.com.mt, however, EU Secretariat head Glenn Micallef emphasised that fiscal matters continue to require the unanimous agreement of member states, suggesting Malta’s continued willingness to scupper the EU’s taxation plans if they are deemed to be disadvantageous. Abela clarified that digital taxes were not discussed during negotiations.

Abela hopes to see Malta become EU net contributor

The EU leaders’ agreement would ensure that Malta will remain a net recipient of EU funds until at least 2027, with Abela stating that the funds allocated to the country were proof that Malta had persuaded its peers that it is a “stable and successful country that is ready to implement reforms where necessary.”

But Abela said that in the long-term, he would hope to see Malta become a net contributor of EU funds under his leadership, as this would be a sign that its economy would be stronger.

The government has emphasised that through the Malta will be allocated €2.25 billion in EU funds, of which €1,923 million hail from the MFF. These include funds that are being allocated to the Malta-based European Asylum Support Office, though Micallef emphasised that this allocation would also contribute to the local economy.

The additional €327 million are grants allocated to Malta through the RRF funds, with Abela noting that the loans made available to Malta are not included in the total sum. Malta is yet to decide whether it will be making use of these loans: Finance Minister Edward Scicluna has long emphasised that the government has never faced any issues with securing funding locally through government stocks and bonds.

The agreement reached, however, is not final: the European Parliament will need to approve the MFF, and its negotiation team has warned that its approval should not be taken for granted.

Abela also said that he understood why he received questions which suggested that Malta had to give in on important issues to secure its financial package.

He said that he himself doubted Malta’s ability to secure such a strong allocation – which, he emphasised, was the greatest allocation of funds Malta ever received – ahead of the summit. But he emphasised that Malta was determined to fight for what it felt it deserved, and that it had a strong negotiating team working on its behalf.